InterCap: Capped Interest Rate Bonds from Integer Home Loans
Integer Home Loans is South Africa’s latest mortgage leader, the company launched in October 2007 and is rapidly growing its client basis.
The company recently launched a very interesting home loan product called, Intercap.
Intercap allows homeowners to cap the interest rate on your bond at the current prime rate while also allowing them to benefit if interest rates drop.
The Intercap home loan looks to offer homeowners complete peace of mind and security. If rates are hiked your bond with remain at its capped level – but if rates drop your, monthly bond repayments will also drop.
You need to carefully consider the advantages of capping your bond at prime or higher as this benefit comes at a cost.
Simon Stockley, the chief executive of Integer, says the actual cost of capping your interest rate is determined at the time you choose to cap your rate and is a function of the yield curve at the time.
You can choose to pay the costs upfront or you can have the costs amortised over a longer period of time, or even for the remaining duration of your bond.
For example, if you have a mortgage bond of R700 000 and you capped the interest rate at prime (15.5 percent) over one year, it would currently cost you R8 062 as a cash, upfront fee.
You can choose to cap a portion such as 50%, 75% or 100% of your total loan amount.
You can select to cap from your current discounted rate to the Prime rate, or choose an option of 0.5%, 1.0%, 1.5% or 2% above this current rate, from the options available. The term of the cap will vary between 12 & 60 months, subject to the offering available at the time.