Capitec launches new home loan offering at 6% | Here's what you need to know

The property market is experiencing a rebound, despite the Covid-19 pandemic - with banks and bond originators alike noting an uptick in home loan applications.

And digitally-savvy Capitec has seen it as the perfect opportunity to launch its new home loan offering - which takes about 5-minutes to complete online and offers a competitive 6% interest rate.

Francois Viviers, Executive of Marketing and Communications at Capitec, says the offering was "developed in response to strong demand for a simple and efficient, digitally-led home loan option".

'Simple and paperless'

In a nutshell, it's a paperless process, meaning no admin-intensive paperwork or PDF docs to fill in. Previously, Capitec would send a qualified lead to its partner mortgage finance company SA Home Loans who would then start the paperwork and qualification process - but the new interface is perfectly in line with the digital experience expected from the bank, says Viviers.

SA Home Loans will continue to process the applications for the bank (a partnership they've had since 2014), with their consultants on hand to assist throughout the process - should applicants require human interaction. The online application follows a simple 4-steps, with questions that are easily answered through multiple choice or simple entries such as name, surname and income.

You don't need to have any documents on hand - IDs, Bank Statements, Payslips and a signed Offer to Purchase can all be emailed after your application has been pre-qualified and approved online.

'Real-time tracking'

You can also track your application in real time, with Capitec's 6-step process that provides clear communication describing the details of each step via the online portal and keeps applicants informed if anything further is required.

While the 6% interest rate offered to applicants will not be fixable, it is competitive at 1% below the prime rate of 7%. It is worth noting that the SA Home Loans rate and in turn Capitec's interest rate, is not calculated according to the prime lending rate but the Johannesburg Interbank Agreed Rate (Jibar). It is independently calculated and is "effectively the rate at which banks lend money to each other".

Jibar, while reviewed quarterly, is a good indicator of any fluctuations and decreases in the repo rate, according to Viviers, as it typical tracks in line with the repo rate, especially over a long-term period.

Applicants should also note standard home loan fees apply and are also calculated in your online application - including transfer and registration costs. The Capitec service also has an added R69 monthly administration fee and an initiation fee subject to the overall home loan amount.

'Government employee discount'

Capitec's home loans are capped at R5 million over 30 years - while the bank would look at increasing that in future, it is within this band where the need is, says Viviers. Government employees applying for a new home loan or who are switching their existing bonds, could also qualify for a discounted interest rate.

"To qualify you must use the government employee housing scheme (GEHS) stop order. This special home loan package offers a flexible term of up to 20 years on 100% of the purchase price, depending on the applicant's affordability."

"We look forward to helping South Africans live better with our new home loans product. Buying a home is an exciting time in people's lives and we believe the process should be as simple and efficient as possible." Viviers said.