Mortgage quote in South Africa: 4.87% fixed for 3 years?

[HonestWorkshop]

We may move before a fixed term finishes, which makes the exit terms as important as the initial payment. The quote is for a Cape Town purchase of about ZAR 11,920,000 at 4.87% fixed for 3 years.

The headline offer I first saw was cheaper, but it was not based on the same loan-to-value band and the fee structure was different. For a fair lender comparison, should I focus on the cash paid up to our likely moving date, the interest over all three years, or APR?

I am also checking whether portability would actually cover the next purchase and what an early repayment would cost. The rate reset is the harder risk to unwind if we stay longer than planned, so I would be interested in how others model that alongside the possibility of leaving early.

 

[rhea_dawn]

Given the possible move, I’d compare total cash paid up to your most likely exit date, including arrangement fees and any early-repayment cost. APR can be less useful if its assumptions do not match how long you expect to keep the loan.

Are the fees payable upfront or added to the balance? Also, is the 4.87% being compared with offers at the same loan-to-value? Otherwise the headline rates are not really comparable.

 

[AdaHope]

I wouldn’t optimise only for the expected move date. Plans change, and you could still hold the loan when the fixed period ends. Run at least three cases: moving early, completing the 3 years and refinancing, and keeping the loan after the rate resets.

For portability, ask the lender exactly what happens if the next property costs more or less and whether a new affordability assessment is required. A portable rate is not automatically the same as a guaranteed portable loan. Then compare the monthly payment under each case, not just total interest.