Switching can save you money
Switching refers to the transfer of your home loan from one bank to another.
i.e. Changing the bank you’ve chosen to finance your home loan.
The process involves your new bank canceling the outstanding amount on your home loan and taking over the new loan amount.
There are a number of reasons for doing this, not least of which is to get a better interest rate on your home loan. Although a better interest rate is the most common reason for switching, better service and debt consolidation also provide extra incentives.
When switching you can also apply to have extra funds released on top of your original mortgage, this is know as Equity Switching. An example of equity switch would be if your outstanding loan amount is R500 000 and while switching you’ve chosen to apply for a loan amount of R550 000.
The extra funds can be used to do renovations or to consolidate debt.
Very often your new bank will offer you a better interest rate on your loan amount, so you’ll be paying lower premiums for your mortgage every month, which can eventual save you thousands on your mortgage repayments.