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Company finds new rates for old bonds
02 Aug 2005 - Cape Argus

Company finds new rates for old bonds


02 Aug 2005

Cape Argus " Graham Norris, Property Editor

ARE YOU getting the best possible deal on your home loan? A new company is offering to check that bond holders are getting the best interest rates available and, if necessary, to take over the administrative headache of the re-mortgage process, at no cost to the home owner.

Bond Busters, formed a year ago, is taking a concept from Britain and applying it in South Africa. 'Many people in the UK are re-mortgaging every two or three years, switching from one lender to another," said Ian Wason, managing director of Bond Busters. He said South Africa was where the UK was 10 or 15 years ago in terms of mortgaging practices.

'In Britain there are 200 lenders offering up to 3 000 different mortgage products, ranging from capped rates to buy-to-let," he said.

Wason said that, as people's risk profile changed over time, they should qualify for a better rate. 'For example, a newly married couple took out a out a 100% loan on a R500 000 house five years ago. Now the value of their home has doubled to R1m and they're a much better risk to the bank and the interest rate they're being charged should reflect that.

"If they were paying the prime rate - 10,5% - and this was reduced to 9% they could save R 500 a month, R375 000 compounded over the 20-year term of the bond."

He says this is a business that very bond holder should be aware of. 'It should be a no-brainer to check that you are getting the best rate " it's like a health check-up."

Wason, an accountant who worked for Deloitte & Touche in the city of London for several years, first came to SA three years ago. 'I saw the tremendous opportunities here," he said. There was a need to demystify mortgages and make people realise that they were commodities like any other product on the market, he said. 'Our number one job is education. That's what all our consultants do - they talk people through their current situation and then negotiate with the banks. We put their home-loan business back into the market " including with their existing lender " to get the best rate."

He said that people had been brainwashed into thinking they couldn't get out of a homeloan agreement or negotiate a better rate. 'The whole focus of the business is on taking over the administration of people's bonds and seeing whether it's worth switching to another lender. Although Bond Busters doesn't charge bond holders for its services there are, of course, costs involved for the client in the form of bond registration and conveyancing fees, but these are dwarfed by savings on the new interest rates," he said.

If banks offer a competitive product they'll grow market share, he emphasised. 'Competition is the only way to stop banks overcharging clients when they could be offering them a better rate."

Bond Busters was growing rapidly, he said, with the volume of bonds they processes doubling quarter on quarter. 'We have increased the number of our consultants who deal with the clients and negotiate with the banks from three to 12 in the past five months," he said.


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