Selecting a bond

Starting to look at properties is not an easy task, firstly there are numerous properties to choose from and finding the property to suit your need can be difficult. However something that is even more difficult than selecting the right property is selecting the right bond choice and procuring a good bond from a reputable lending institute.

CKM Homeloans is a bond originating company that assists its clients in selecting the right bond choice and procuring the best bond package available by negotiating a better interest rate with the banks. CKM Home loans is committed to service excellence and adds a personal touch to ensure your dream of home ownership.

The right bond choice

• Bond choice 1: Variable rate
• This bond choice and the relative interest rates are directly dependent on the interest rate; if the interest rate rises, the interest rate on your bond will rise and respectively if the interest rate drops, the interest rate on your bond will drop. This is a good choice if you believe that interest rates are dropping and you are not concerned with rising of interest rates.
• Advantages of this bond choice is that you can borrow more and the initial interest rate is low as the risk to the lender, the bank, is less.
• Disadvantages for this option include that your payments increase when the interest rate increases.


• Bond choice 2: Fixed rate
• This means the the interest rate on your bond is fixed and does not fluctuate with th interest. If you are in the belief that the interest rate is rising and that it is continuing to rise therefore you want something more stable.
• The advantages of this bond choice is that your payments are fixed and cannot go up during the chosen period as well as it is an easier option to budget for.
• Disadvantages include that you will have a higher initial interest rate as there is a greater risk to the lender. It is harder to qualify for and if you terminate the contract before the expiry date, for example you move your bond to a different bank you will be liable for a finance charge.


• Bond choice 3: Reducing rate
• For this bond choice an approved applicant can benefit from a reducing interest rate over an agreed period of time, usually not more than five years. The interest rate on your bond will decrease every three to six months by a set percentage no matter what the interest rate is doing at that time.
• Advantages are the same as that of the fixed rate option, payments will not increase and you will be able to budget more easily.
• If you terminate the option before the end of the contract a finance charge will be levied this is the only disadvantage.


• Bond choice 4: BA Linked rate
• For this option your interest rate gets re-evaluated every three months, where after you will have a fixed rate for three months. There is usually a minimum and maximum loan value for qualification criteria.
• Advantages are that it is easier to budget for if it is 3 months fixed rate and that the interest rate will generally be lower than the variable interest rate.
• You are required to have a substantial deposit for this option therefore it is harder to qualify for, an obvious disadvantage, as well as the rate is only fixed for 3 months.


• Bond choice 5: First time Homeowner
• This bond choice is for people who require a loan that is more than 100% of the property value so that the owner can cover transfer costs and registration fees.
• Advantages are that there is no deposit required ands you will not need cash to pay for costs associated with purchasing a property.
• Disadvantage is that it is only targeted at a specific target market.

CKM Homeloans can assist you by saving you time and shopping around for the best bond choice for you at no cost to you.