A morgage originator deals on your behalf with the banks in South Africa to secure your home loan and get the best deal for you. You get professional advice regarding your home loan and the mortgage originator is able to deal with a variety of banks in South Africa in order to get you the best interest rate and home loan package. Using a mortgage originator does not cost you anything as they receive their commission directly from the bank involved. The banks can afford to pay this commission as they save on staff salaries when they use mortgage originators.
Using a mortgage originator to secure your home loan definetely has some advantages to it. The mortgage originator’s advice tend to be more objective than what you would receive from a bank. If you go to the bank directly you will receive advice that is usually biased towards their own products and services. Mortgage originators also work with various banks in South Africa to ensure competitiveness which usually results in a better deal on your home loan.
Mortgage originators send hundreds of applications to the banks in South Africa each month. This places the mortgage originator in a better position to negotiate a lower interest rate on your home loan and a small difference in interest can make a large difference to the overall amount on your home loan.
The rise in popularity of mortgage originators in the home buying process has now reached a level where they are collectively saving South African consumers R30bn a year in interest charges through lower home financing costs.
This comes from discounts to the prime lending rate originators achieve by shopping around at various banks on behalf of homebuyers to secure the lowest borrowing rates possible says the company that launched bond origination in South Africa in 1999.
There is no charge to homebuyers for originators’ services. Rhys Dyer, chief operating officer of MortgageSA, the originator that has placed over 300 000 people in their homes with over R100bn in mortgages, says that prior to the advent of origination banks offered customers home loan rates of, on average, 0,5% below prime. “Since originators came on the scene, we have driven this average rate concession down to 1,5% below prime, saving consumers on average 1% on their rate concession. “
This 1% saving – based on annual new homeloan values – represents a R30 billion interest savings annually to consumers over the life of their bonds.” Dyer says that in the current cycle of rising interest rates, consumers need to be even more certain they are getting the lowest rate when sourcing a home loan because even a 0,1% lower rate will make a significant difference over the life of a bond. Dyer notes that as early experience of the NCA has shown there is variation in banks’ lending criteria. This means that people declined by one bank are often approved by another.
Authored By: Rodney Hayter, September 25, 2007