This is a good time to shop around for better deals

2012-07-07 09:45

If you are one of those people who like to do all their banking with one bank to prevent the hassle of dealing with different banks, you could be limiting your opportunities of getting a better deal elsewhere.

If that is the case, consider speaking to other banks for your different needs, especially if you are planning to buy commercial property or a second home.

According to Gary Palmer, CEO of Paragon Lending Solutions, clients in the past did all their banking with one bank, but now there are more reasons to shop around for better deals while keeping your transactional account with your primary bank.

Clients should not be unnecessarily tied down to their primary bank, but to shop around for better deals.

This is particularly applicable to wealthy clients who are unable to obtain a loan from one bank and who do not consider looking elsewhere.

You might be banking with FNB, for example, and have your home loan with Nedbank because they offer you a better deal.

“Just because your primary bank offers you a deal, it does not mean it’s the best deal,” says Palmer, who explains that although banks have not changed their lending criteria – which are serviceability, security and a client’s balance sheet – they are now more focused on “unsecured lending”, which include personal loans and credit cards.

In the past, banks granted 100% home loans quite frequently, but today this is highly unlikely.

However, you can easily get a credit card application approved, even though your home loan application was declined.

The banks are also focusing on deposits and would rather finance a R2 million property with a significant deposit, for example, than a R360 000 property with no deposit.

“In this market for the past two years, banks’ appetite for funding commercial property transactions has decreased dramatically because of bad debt.

As a result of this, they may not be able to offer you a better deal,” Palmer cautions.

Banks are now competing fiercely for high-net-worth clients.

This is due to clients being more aware of their options in getting better deals elsewhere than their primary bank.

Banks would rather focus on one client with a deposit – even for larger financing – than on many with low balance sheets.

Palmer advises clients with a low balance sheet to make themselves attractive by putting down a deposit whenever they approach the bank for finance, especially large transactions such as a home loan or
car finance.

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