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What are the best banks for home loans in South Africa?

Despite evidence that some banks offer better customer service than others, going only to your own bank for your home loan can never be your best bet.

Best Banks for Home Loans in South Africa

Article summary

  • Each bank has different lending criteria, and some banks might offer you more favourable interest rates than others.
  • You can look at the general performance and customer satisfaction ratings for South African banks to get an idea of which ones offer the best service.
  • Applying to multiple banks via a home loan comparison service gives you the best chance of securing a good deal.

A home loan enables you to fund the purchase of your home with a loan from the bank, making home ownership a realistic option for the many, not just the few.

Of course, the bank reserves the right to reject your home loan application; and even if they approve it, you will have to pay interest on the loan amount, which is essentially their way of charging you for the risk they’re taking by providing you with a loan.

But you don’t have to apply to only one bank. Each bank has different lending criteria, and some banks might offer you more favourable interest rates than others. Many home buyers don’t even realise the benefit of shopping around for the best deal.

How to find the best bank for a home loans

Home loan interest rates may vary depending on the lending criteria of the bank, as well as the financial situation of the applicant. As such, it’s difficult to provide a definitive answer to the question of which bank is best for home loans, as it may be different for each applicant.

However, one can look at the general performance and customer satisfaction ratings for South African banks to get an idea of which ones have the highest quality service, and the best understanding of their customer’s needs.

The best bank for South African youth

A survey conducted by The Sunday Times found FNB to be the most popular bank among SA youth. This is particularly relevant to many prospective first-time home buyers looking to get onto the property ladder, as they are more likely to fall into the younger age groups.

As a first-time home buyer who lacks the necessary funds for a deposit, you can also apply for a 100% home loan (where your home is entirely funded by the bank, no deposit required). South Africa’s largest home loan comparison service, ooba home loans, has a strong track record of securing 100% home loans for clients, with three out of four applications being successful.

The best banks for customer satisfaction

The South African Consumer Satisfaction Index for the country’s retail banks, compiled by consulting group Consulta, serves as an invaluable guide for determining just that. According to Consulta, it is the largest and most comprehensive survey of its kind for the South African banking sector.

The survey, published in early 2019, showed Capitec, FNB and Nedbank as the leaders in overall customer satisfaction, with Capitec and FNB also scoring high for customer expectation, indicating consistent performance levels over a prolonged period.

The most improved bank

Standard Bank showed the biggest improvement in customer perception, with an increase of +5.1 index points since 2016. Furthermore, they have recently introduced an innovative new price structure for home loans, where the loan is divided into three portions, each one being priced individually, with a decreasing interest rate in the 2nd and 3rd portions. As the client pays off their loan, the interest rate will gradually decrease over the course of the bond, resulting in significant long-term savings.

Can you get the best deal by applying directly through your bank?

Applying for a home loan through your private banker may not necessarily get you the best deal, as your banker’s first priority is to get the best deal for the bank. Furthermore, if the application gets rejected, you will either have to apply to a different bank, or wait around until circumstances with you or your bank change. Meanwhile, the clock is ticking on your offer to purchase, and you may end up losing the home you have your heart set on.

“There are things a bond originator can tell you that no index ever will,” says Rhys Dyer, CEO of ooba home loans, South Africa’s largest home loan comparison service. “The plain and simple truth is that you can’t know if you’ve got the best deal from a bank, if you’ve only approached one bank. You need to access choice and we can assist you with that.”

Furthermore, ooba home loans makes the home buying process easier by offering a range of home loan calculators that can help you determine exactly what you can afford. Then, use ooba home loans’ free, online prequalification tool, the ooba Bond Indicator. Once you’ve found a home that meets your requirements, you can apply for a home loan.

Get prequalified for a home loan today

DIY with our online prequalification tool, or speak to an expert.

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