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Which bank has the lowest interest rate on home loans in SA?

It's worth the effort to shop around for the best deal, as some banks may offer you better interest rates, and a higher chance of home loan approval.

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.
  • With the help of a home loan comparison service such as ooba Home Loans, you can apply to multiple banks and compare the packages they offer.
  • Applying to multiple banks via a home loan comparison service gives you the best chance of securing the lowest interest rate.

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.

We recommend that you don’t only apply to 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 do banks determine interest rates?

The South African Reserve Bank (SARB) sets the prime interest rate, which is the basis for all other interest rates, including home loan interest rates.

The bank’s interest rate on your home loan is linked to the prime interest rate – either above or below prime, depending on your credit risk profile.

The current interest rate is the lowest it’s been in decades, thanks to a succession of interest rate cuts. This makes it a good time to buy, and to find a bank with a good home loan interest rate in order to take full advantage of the situation.

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.

This is why it helps to employ the services of a home loan comparison service, such as ooba Home Loans. They can apply to multiple banks on your behalf, and help you secure the deal with the lowest interest rate.

Improve your chances of getting a low interest rate

The interest rate on your home loan depends largely on your financial circumstances. The less of a risk the bank perceives you to be, the lower your interest rate.

Out of the factors you have control over, the credit record is the most important. The bank uses your credit record to determine how much of a risk you are. You can improve your credit score by:

  • Paying off debt.
  • Pay bills on time.
  • Avoid owing more than a third of your gross income on debt.
  • Close accounts when you’ve paid the balance owing. This will count in your favour as it will indicate that you are at a lower risk.

You can get pre-approved with ooba Home Loans to determine your credit record, and your likelihood of qualifying for a home loan. This in turn gives you a good idea of how favourable your interest rates will be.

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.”

So as mentioned, your best bet for getting low interest rates is to have a home loan comparison service such as ooba Home Loans apply to multiple banks on your behalf.

Furthermore, ooba Home Loans offers a range of tools that can make the home buying process easier. Start with their Bond Calculator, then use the ooba Home Loans Bond Indicator to determine what you can afford. Finally, when you’re ready, you can apply for a home loan.

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Average rating of 4.82 from over 3 000 reviews

Simply The Best

Ooba home loans services are simply the best. My Consultant Bianca Dancer was so hands on and helpful from the get go. She guided me through the entire process and put me at ease being a first time buyer. I highly recommend their services.

Tia J

Excellent Service

Jay Govender and Maleshini Reddy from OOBA provided outstanding assistance and guidance in securing our home loan. Response times were excellent and they were professional and friendly.

Brice G

Bond Application

Estelle Vorster was really helpful in securing the best deal for my home loan, she not only negotiated a lower interest rate she went as far as securing 50% discount on the transfer costs.

Butana M