 So are there specific ones that you guys have seen or that come with switching alone? Are there specific costs that when you're switching alone They they are Associated with it. Do you know you some people might not be aware of those and can you take us through some of those if they do exist? Yeah, absolutely So typically there's four major costs that you need to actually look at but just to contextualize it You are looking at moving your bond from one institution to another So in that process you need to have an attorney that will re-register not re-register but change the bond from one entity to the other Even you're welcome to the private property podcast. It's a weekday and it's 7 p.m So we are talking everything and anything property if you are joining us for the first time Thank you so much for stopping by and I hope that you are going to have a good time If you are joining us on the Trader Spaces a special shout out to you and thank you and thank you for joining us for tonight's episode So tonight I am joined by experts as usual people who are going to be talking to us about a topic that is really on the pulse and top of mind I'm in the property industry at any point in time because I mean every property Investor and property player wants to make sure that they maximize their property portfolio and of course save money so in today's topic we are talking switching your home loan and possibly accessing some equity and I am joined by Pochelet Lape who's a portfolio manager as well as Kyle Villagasi who is the head of virtual channels at Epsa home loans Good evening guys and thank you so much for joining us Calculators Perfect. Thank you so much for joining us guys. We really appreciate it and I'm looking forward to talking to you guys About this conversation to which is exactly switching a home loan. What is it and how does it look? Who can switch a home loan like take us through the nitty gritties and your experience how has switching home loans helped people in the past Push up. Let me start with you ladies first Absolutely and once again, thank you so much for having us this evening as such a pleasure to be joining you And I think you know, maybe that starts with understanding the context You know in terms of where we find ourselves, you know in the South African context So we've seen very low interest rates over the time when we had called it You know, knockdown, etc. We saw the reparation decreasing Significantly, which actually have made sure that you know customers had access to Credit which actually make it possible for a lot of our customers to access home loans Now, we know that you know when you are passed for a home loan They do offer the ability assessment etc. You are given an offer from an interest rate perspective And that is actually how you actually get to you know, get access to your home loan now We've seen over the past couple of months That is far as can result banks has actually increased the reparation right so each time interest rates increase It means that you pay a little bit more than you would have what not really paid So every time the fab says the reparation is increasing back to the five basis point you go and you calculate Oh, that's an extra 300 grand and you can only let them if that happens four times in a year You're paying about 1200 grand extra So customers are actually in the market to look at ways to reduce this pressure from an interest rate perspective And switching is one of the ways that customers can look at, you know, to do some of these pressures from an interest rate perspective So customers are looking for a way to save money and you could be looking for Competitive rates your bank could possibly not be willing to reduce the interest rate And that's why you actually go out to another bank or other banks and say here's buy a home loan I want to switch it to you. Can you give me a better interest rate? It could be service if you're not happy with or you could want to put all your products with one bank Because you want to benefit from the world's perspective, right? So I'm Really that's what fishing is about and when we say fishing we are saying you are literally moving You're spending funds in one bank to another, you're not moving houses and You continue paying a month in advance with another bank Thanks, do you mean? Sure. I'm very informative and when we're talking Switching are we saying that this is specifically for for people who are Like how do we quantify people who can switch? Are we saying it's everyone if you have a home loan and you you are looking for a competitive interest rate Then you can look into switching or are they terms and conditions that are around switching and I'm asking that because One might be in in a current home loan now and thinking of switching Is they closes that might be in their loan agreement with the current bank that they're in that won't allow them to switch? So I don't think we apply any conditions whatsoever in terms of the type of person that actually switches No, do we actually look at it in terms of what you'll be using the funds for? So we try to actually make it as easy as possible for all consumers and to actually meet them Where they are in terms of ease of convenience, but typically the funds could be used for just about anything, right? So from paying school fees as an example to holidays home renovations and even solar solutions Part of the thing is that we can I you can actually use those funds for and I think to Porsche's point Given the strenuous nature in terms of what we're seeing in interest rates It's now the most viable time to actually look at it if your bank is not necessarily giving you the right sort of interest rate And of course we'll get a lot of some of the cost which will unpack a little bit later in terms of transfer costs associated with the switch Sure, let's talk a little bit more about an applicant like someone who is Who's switching? Does this necessarily allow them to access equity because in tonight we want to talk about them possibly accessing this equity Is it is it a given that if I switch I will definitely access a little bit of equity? I'll take that one So I think let's first explain what equity is, right? So you bought the property let's say five years ago and at the time the property was valued as a million so you you bought it for a million and we know that property Appreciating value. So as an example, your property's value has increased now to 1.2 million So you have equity in your property of 200,000 which is the difference between your loan amount and The value of your property, right? Now in the context of switching you would have already paid Some amount to what your loan amount, right? So let's say for argument's sake you sit with an outstanding balance of 800,000 rents now You put equity of 400,000 rents, right? It is the value of that sitting in your home loan So when we talk accessing equity basically what we meaning is that 400,000 rents that are just explained is equity that you can apply to the bank and say I Have equity of 400,000 rents. Can I access this fund? So the bank will obviously go through a credit assessment, an affordability assessment Take if you can actually afford to service the 400,000 rents loan and Granted to you. So basically the bank will pay you the 400,000 rents in cash And I think you know to power point Thanks, don't ask you what you're going to do with 400,000 to be using it for anything as power and exchange Sure, I like the fact that you were saying that we can use it for anything because that's exactly what Carlos speaking to and and I I think I like that fact because you know nobody wants to really be dictated to what they're going to do with money that they receive and My next question is that does it always result in equity because sometimes The value of the the property might have dropped and we've seen it based on Conversations that we've been having on the podcast in terms of property valuations and the market as it's changing and the different things that are changing in terms of Maintenance and all of the things that may devalue your property as a property owner so in the case that it does not result in in In equity for for for the property or the home owner. What happens in that case? Yeah, so I'm I think in the context of switching and equity because we're talking about them interchangeably When you stretch your home loan, let's say in the example I use you've got an outstanding balance of 800,000 and another bank You want to switch it to up that you will apply for the 800,000 rents to be transferred to up that and then you will say Can I have an additional 400,000 rents because I believe that I've put it in my property So yes, there are instances you are rightly you don't have equity in your property It could be that you took out a further advanced while you were with another bank So you've used up the equity or you switching to soon your property has not really actually related You know any equity so you can't access additional funds But I would assume that you know as a customer you would possibly have a sense of where you are from an Expectors and before you actually applied, you know property valuations are done as well to your point as part of application process Which you know we can discuss at a later stage So I would say if you do know that is what equity or you suspect that is what equity Apply for it. Let the bank to evaluation and tell you how much it is available and how much we can expect to you Sure Caller reaching your home loan and possibly Accessing some equity from whatever you have already paid on your home loan So if you have any questions any comments, please do filter those to us so that we can field them right here on the conversation tonight Thank you so much for everyone who's actually joining us on the Facebook feed We really really appreciate you always coming back and spending your evenings with us So I'm just quickly gonna go through the poll the poll for the day. We asked everyone What is your favorite house design and we gave everybody four options? We gave them the modern house design and they keep Dutch house house design as well as the Victorian house design and the Tuscan house design style and Our our answers were actually quite almost the same because everybody said either definitely Tuscan or a Modern day with a touch of farm house design style If you got equity posture and you had an ability to change your house, which one would you go for? And Kyle I'm guessing you're gonna go more than of course So modern digital that's why I'm at because everybody really wants to come home and ask Google home to put the lights on so Everybody right will just put go for for modern. Thank you so much for that guys And we will we'll keep going on to the conversation and ask in terms of the conditions because one of the things that I'm already thinking Is that then you find people who switch to to to to one financial institution or they get there They are they are home known from one particular institution and then keep hopping around We know we've got different financial institutions in South Africa that at different times may provide competitive rates Are they conditions that apply to people who who switch number one or who after switching you don't you are not able to do one? Two three are those conditions that are outlined before what before after one switches Cal Yeah, thanks. I'll take that you do so From a conditions that when banks typically don't place any conditions on the customer this who switched to them, right? They are obviously typical conditions that are associated with a home loan top of mind I mean looking at property insurance Life insurance in some instances based on income bracket can become mandatory and of course the condition of paying your monthly Repayment on time So I think those are the typical ones We would typically also go through a normal affordability assessment when we do a switch Assess the asset if you're switching over to us, but we don't necessarily place any Significant conditions on people switching over to us outside of the normal status quo criteria that we normally apply So are we saying that there's a possibility for you attempting to switch and your switch application being declined? Yeah, so it can be declined by virtue of us needing to actually go through an affordability assessment, right? So if for whatever reason there are significant issues on your credit bureau or even if it does a judgment There will be those hindrances that would prevent us from granting you that switch even if you choose to come to us so it is important especially from a NCA perspective that we grant credit appropriately and we're not seen as being reckless in our approach When we grant him credit, but that goes for every application, right? Not just you need to switch it Sure, and you know closely related to this we spoke on the podcast not too long ago about how costs or these different costs that come with buying a home a home and a property creep up on Perspective buyers and they were not aware that these things were going to happen, you know So are there specific ones that you guys have seen or that come with switching alone? Are there specific costs that when you are switching alone? they are Associated with it. Do you know you some people might not be aware of those and can you take us through some of those if they do exist? Yeah, absolutely So typically there's four major costs that you need to actually look at but just to contextualize it You are looking at moving your bond from one institution to another. So in that process You need to have an attorney that will be registered not Re-register but change the bond from one entity to the other in terms of the banks that you're dealing with But just to run through it in a little bit more detail We have early termination charges that are typically charged The bank from which you are moving your home loan to may charge up to three months interest charges That would be payable under the agreement Therefore, you need to provide a notice of about three months to your existing bank Informing them of the intent to cancel your home loan with them and await three months before canceling your home loan to avoid termination charges As I mentioned cancellation attorney fees as well because attorneys need to register the bond against yourself if you're a homeowner The deeds office so that comes and attracts bond cancellation costs that would be payable from your side This bond registration cost as well And again as the bank you are switching to would require that a new bond is registered under that bank in the deeds office When the home loan is switched to them It'll appoint a bond registration attorney and those costs will be payable by the cancellations attorney And then lastly we typically look at initiation fees So initiation fees are charged by banks when the new home home loan is initiated And these costs are payable by the consumer as a once-off payment that can also be added onto the loan amount Just to make things a little bit easier But I think the biggest outcome here is that there's no transferring costs, right? So given the fact that you already own the property you mitigate your typical transferring cost that you would pay At inception of a new bond. So typically there's bond registration costs as well as transfer costs But obviously in the form of a switch the property still remains in your name So we mitigate all those costs all together Thanks Cool. Portia, I'd like I like and you know as a property investor or home owner as I'm sitting at home now and watching this episode tonight I've got one question in my mind when and how do I apply? So can anyone please take us through that process? I'm like you were just saying now Take us through that process. How does it look? And how long does it possibly take you spoke a little bit about a three month 12 week period? Talk us through how it is and How it looks typically and how will I know that I'm doing it, right? And what are what are some of the things to look out for for me to know that I'm doing it wrong? Also, so I think maybe just to highlight the process starting from where I ended off In principle, there are two checks that are typically done Bond on the consumer to make sure that from a credit worthiness standpoint There are no challenges there in terms of bureau or judgments. The second part is on the property But to unpack it in a little bit more detail You'll complete an application with the bank in which you wish to switch Including the property valuation like I mentioned will go through a normal credit affordability assessments We will ask for some of the documentation that you may provide In most instances now we are able to do it digitally So we have golden sources where we're able to actually pick up a lot of the documents Typically your payslips are something that's critical to allow us to do that assessment Beyond that, you will then place a notice of cancel on your home loan with the existing bank The bank that you're switching to with a point of bond registration Attorney to register your bond with the deed's office and the bond registration cost will be payable by you to the attorney As you as they proceed to lodge and register the property From a bond cancellation perspective At the bank that you're switching from would appoint the cancellation attorney to cancel your bond with them in the deed's office And the cancellation cost will be payable by you as the consumer to the attorney When we look at it as well, you would need to ensure that you satisfy the conditions placed on your home loan by the bank You are switching to such as property insurance life cover as well as like I've mentioned setting up that debit order And we have a very extensive debit check process where we need to actually just confirm that debit order And we've actually advanced that to doing it a lot more virtually as well But once you place the notice to cancel on your account Your current bank also can make contact with you to determine the reason that you're switching And they may attempt to sort of deal with some of the reasons that you prescribe to them So for example, as we mentioned that price may be a bit of an issue So your bank may try to contact you to offer you a better price prior to you moving over to another bank purely from a retention perspective So from a process perspective, that's typically what it takes I think the biggest parts in terms of the time period that we mentioned is the deeds office component whereby The attorneys are really re-registering that bond through to the new institution But typically through the number of mediums that we have It's a very quick process to get that outcome from the bank Maybe biasly from a virtual standpoint With an online application through what we call the digital sales platform You can actually get a pre-approval as well as what we call an approval in principle as quickly as 15 minutes Just to get a sense in terms of how much you qualify for if you switch over to us But happy to unpack, you know, those mediums in terms of how you Can engage with us a little bit later. Thanks Thank you so much for that and as we wind up tonight's Conversation Portia. Do you have any last words to say to anyone who is looking to switch? Yes, please. There's two things I wanted to say You know the switching offer that I spoke about earlier I think if you can take advantage of that offer It's only up until the 31st of July The 50% discount and there's now 20,000 rent And I think level raised an important point Where you know, they were asking can I use the equity from my home loan to pay off other other loans, right? So if you have your unsecured lending products, they attract, you know, very high interest rates Perhaps you want to reduce the pressure You could actually use that equity to pay off the form loan there You know those those amounts because it will reduce the pressure And you will most likely not be put under pressure to pay off in five years You know, you can expand it for as long as you want And you know, typically from an up-cut perspective you've got what you call the multi-tent product So it basically means that if you access this, that 400,000 rents that I spoke about, let's say a 100,000 rents You don't have to pay off over 20 years You can actually structure it to pay it off in five years' time So it is a great way of actually reducing, you know, the pressure from an interest rate perspective Thanks. Thank you so much for having us this evening Thank you so much guys for joining us tonight Thank you so much for the information and we really really appreciate you enlightening Our family to know what they can do to ensure that they always maximize These product offerings that different financial institutions have to make Their property portfolios grow and to really just save those extra hundreds or three or four hundreds that you mentioned earlier Thank you so much for joining us and have a good night Thank you Cheers And we have reached the end of our conversation tonight. Thank you so much for watching And we really really appreciate you always sticking around when we are talking and having these conversations around how you can maximize Your property portfolio until the next time I see you right here on the private property podcast 7 p.m Every weekday. Have a beautiful night