Things that you should know about bonds

Just about every person that is looking to buy a home will require bonds to finance their property dream. As an individual you may approach the bank for property financing, but with a company such as CKM Homeloans at your side you will benefit from bonds that have the best negotiated interest rates.

There are several things which may be useful to know when you start the process for acquiring bonds.

Terminology

• Bond term: a bond term is the total length of time over which a bond is paid, This could be between 15-25 years.
• Rate: rate refers to the interest rate that is charged on bonds there are several factors that determine the interest rate that an applicant qualifies for:
• Repayment to income percentage: this repayment of bonds should not exceed 30% of a joint or individual income.
• Loan to value percentage: to secure a lower interest rate with bonds you must ensure that you have a deposit, the bigger the deposit the lower the interest rate.
• Size of the bonds: the bigger the bond is generally the better the interest rate, banks reserve the best interests rate for bonds of R1,3 million or more.
• Repayment term: If the loan is more likely to be paid of in a short period of time the likelihood of being offered a bigger rate of discount is unlikely as this is not profitable for the bank.
• With bond originators such as CKM Homeloans you will be able to benefit from competition between the banks as each try to secure your business.
• Costs: there are numerous costs involved in the bonds process which can accumulate to quite a sum.
• Transfer costs: Paid to the Receiver of Revenue when buying a property and transferring it to your name.
• Attorney fees
• Deed office levies and fees
• Municipal rates
• Bank charges
• Bond initiation fee: to cover bank administration costs
• Monthly administration fee by the bank

When you are deciding on the term of bonds it is important to take several factors into consideration. The longer the term over which bonds are paid the lower the monthly repayment, however if you put larger payments over a period of time you will be paying of the bond quicker and putting money into an appreciating asset. If you are using the property as a rental property it would make more sense to pay the bonds back as quickly as possible so that you will see a profit sooner.

There are several tips which can be put into practice to decrease firstly the term of bonds and secondly save you money because of interest that is saved.

• First and foremost before you apply the tips make sure that you get the best deals and bonds as this is a long term commitment that cannot be taken lightly.
• If you pay your first installment on the day of registration you will reduce the term your bonds by approximately eight months.
• Pay a little extra into your bond repayments every month even if its just R100 as this can save you interest as it is calculated on a daily basis and in the end your term will be shortened too.

There are several other tips that could be put into practice, but remember that the most important advice which you can get with regards to bonds is to guard your credit worthiness as this means that you will get better finance deals.

Let CKM Homeloans show you that their service excellence exceeds those of all expectations and will only deliver the best; contact CKM Homeloans via their website today.