Transferring a bond from one bank to another bank

[Spreadsheet Ranger]

Hello guys,

 

Have any of you transferred your bond to a different bank yet?

 

What was the process like?

 

What are the costs involved?

[Bandit]

Yes.

 

FNB to Investec for a -0.5% lower rate.

 

It's a slow process because of COVID and the deeds office shutting down every other day. Both banks have been ready to do the transfer for a while now.

 

So, long story short:

- some (all?) banks like FNB require you to give them advanced notice that you intend to settle the loan (3 months I think), so that's step one.

- costs: It will be a repeat of the bond reg costs unless the attorney does it at a discount (so on a R1.5mil loan it's about R25-30k). These costs can be loaded onto the loan if you wish.

- there is a cancellation fee at the current bank which is in the region of R5,000.

 

For a better interest rate and/or bank and over long enough time it is worth it.

 

 

 

[Spreadsheet Ranger]

Mmmm, I can get 7.01% at (bank A) <- will name names when its done.

Bank A is not my favorite.

 

I am with Capitec so no options but to go with a different bank for the bond, but I am thinking maybe after 2 years I move to Bank B including my banking.

[SaurusDNA]

Have you tried SA Home Loans? It's their business and in my experience they will beat any quote (at least from everyone I've spoken to, including my own experience.)

My wife and I have a joint home loan and we're now paying 6.75% and that's with her having her own business (not salaried).

Edited July 30, 2020 by SaurusDNA

[Spreadsheet Ranger]

I probably should've now that you mention it, it's the first time I am buying so the agents said they have a business they work with (bond originator) and I figured let me give it a shot they came back with 6.95 to 7.05% and I figured, meh it's better than I expected so its good.

In hindsight I probably should've tried myself first, but if I am being honest, the whole process is so confusing it was nice with everyone holding my hand along the way (Even if for a little premium)

 

I think when I buy property number two (if life goes well), then I will try to do the bond negotiation thing myself and then SA homeloans, Ooba or Better Bond (they have good youtube ads) 

[SaurusDNA]

Once you've already got the bond, you're in a much better position to negotiate as it's much easier to move a bond than to get a new one.

 

My Colleague and I approach the banks every five years to see if anyone's interested in our bond. Last year, my Colleague moved one of her properties that she has had for 5 years from a bank to SA Home Loans. They waived the admin fees, so the only fees my Colleague had to pay was the bond costs, and that they included in the bond. They dropped her interest rate by 2%, since she was above prime rate with the other bank.

[Spreadsheet Ranger]

Wow. That is very reassuring.

 

Question, I want to pay off the bond sooner than the actual time, my question is how does the logistics of that actually work?

 

Can I just EFT them more money than what is needed, like right now with Rawson, my rent is R9k but I paid R10k every month just to get myself accustomed to higher prices so that extra R1k just sits with Rawson and earns some interest.

 

Can I do the same with the bank, if my Bond Repayment is R10k can I just EFT R11k instead and they will know what to do with it or is this something you need to arrange with them?

 

In essence, I want to pay extra into my bond every month. 

[SaurusDNA]

Yes, you can either phone the bank and ask them to take an debit order of X Rand each month (X being any amount you choose) or you can just EFT a higher amount.

 

 

Edited July 31, 2020 by SaurusDNA

[Spreadsheet Ranger]

Curious if this is good or bad, my Credit Cost Multiple is 2.41

 

(my credit score is 675, which is good, but a credit cost multiple of 2.41 feels bad?)