A first time home buyers loan is a big step for most new home owners and as a new lender, the banks will compete for your loan providing you are able to show them that you are not a bad risk.
We must never forget that every bank is competing for market share and as a prospective new customer for them, they will earn interest on the first time home buyers loan that they offer to you. The next step for the banks once they have you as a customer is to upsell you into the other products that they have to offer like cheque accounts, investment accounts, personal loans and other banking services. They also now have access to your spouse or children through your account by offering reduced fees to spouses or study loans to your children.
Bear this in mind when making an application for a first time home buyers loan and never accept the interest rate that they first offer you. The fact that the bank approves your first time home buyers loan means that they want you as a customer and this puts you in a position to negotiate the interest rate. A home loan is a long term loan that attracts a huge amount of interest over the years and even a 0.5% reduction in the interest rate will see you saving a lot of money over the period of the first time home buyers loan.
Use the home loan calculator to see what you will save if you are able to negotiate a reduction in your interest rate.
With Interest rates at their lowest in decades in South Africa it opens up the market to more and more first time home buyers whose income now allows them to loan more than in previous years. First time home buyers often qualify for 100% home loans in particular on government subsidised projects but on many other projects where the developers have consulted with the banks on the valuation of the property and constructed their pricing accordingly.
Banks are more and more risk averse but with developers realising that they cannot simply work on a return basis when pricing properties, they understand that if they consult with the banks and make it easy for first time home buyers to loan from the banks they will sell out their development a lot quicker.