Fixed or Variable Interest Rates? During application stage and up to Transfer, the bank will only offer a Variable Rate. Post Transfer and Registration the consumer can contact their nearest bank branch or contact centre and apply for a Fixed Rate.
What is a Variable Rate? You would be afforded at approval stage a Concession (- below) Prime or no concession (+ above) Prime.
Your home loan repayments are initially based on a variable interest rate, which is linked to the prime lending rate determined by the South African Reserve Bank (SARB). Which as at today = 7,00%
When the prime lending rate changes, your home loan interest rate will be adjusted accordingly. This means your monthly instalment could increase or decrease depending on the prime rate changes determined by the SARB.
What is a Fixed Rate? You have the option to fix your interest rate for a set period. Post Transfer & Registration. The Fixed Rate will NOT be at the concession you were offered previously, it would be tailored to your deal and we have seen it to be at Prime or Above Prime *client / loan dependant
Your interest rate will not change during this period, regardless of the prime rate changes from the SARB.
The benefit of a fixed rate is that even if interest rates rise, the interest rate on your home loan will not change, and you will pay the same instalment every month. A fixed rate allows you to budget more effectively. Once the set period expires, your interest rate automatically returns to the variable rate. You will then have the option to agree to a new fixed rate.
Each bank has their own Fixed rate term some currently offer fixed rates for up to 6, 12, 18, 24, 36, 48 or 60 months.
Once your Fixed rate term lapses, the bank will renegotiate your new rate. You are not guaranteed to revert back to the original concession granted to you prior to the Fixed Rate Term.
Keep safe and well and please don’t hesitate to contact us at anytime. Best to all, Margie, Clare, Fiona, Terry, Arlene, Brigitta & Jane