Cape Town mortgage quote: comparing 7.90% fixed for 3 years

[AishaSlate]

The lender is checking what the 91-day reference in the paperwork actually applies to, which has raised another question about how I should line up these offers.

They are for a Cape Town purchase of roughly ZAR 9,009,000, and one shows 7.90% fixed for three years. Once the fees and loan-to-value bands are included, the cheaper-looking quote may not produce the lower cost. The illustrations also appear to use different timing and repayment assumptions.

Would you compare the cash paid over the same three-year window, or include the balance left at the end as well? I’m asking for matching illustrations and written details on early repayment, portability and the rate or process that applies after the fixed term.

 

[drawTheWorkshop]

For a three-year decision, I’d compare total cash outflow over those same three years: deposit, fees, monthly payments and any expected exit or refinancing cost. APR may be useful, but it can become misleading if the illustrations assume different loan terms or that you keep the mortgage long after the fixed period.

 

[way.easy]

What exactly does the 91-day reference mean in the offer? Is the rate held for 91 days before completion, does the fixed period begin after 91 days, or is it simply an illustration assumption? That could materially change the comparison. I would also ask both lenders to rerun their figures using the same loan amount, deposit, term and payment date.

 

[room.earnest]

I wouldn’t dismiss APR so quickly. Total three-year cash cost favours the likely holding period, but APR gives you a way to spot a low headline rate being offset by fees. I’d use both: APR as a broad comparison, then a three-year cost calculation for the actual decision. Neither replaces reading the early-repayment wording.

 

[way.easy]

The loan-to-value boundary may be the bigger issue here. If a slightly larger deposit moves the borrowing into another tier, compare the extra cash tied up with the interest and fee saving. Don’t assume the lower tier automatically wins; keeping a cash buffer may matter more than achieving the lowest quoted rate.

 

[travelsAndGrove]

Portability deserves a separate question rather than a tick-box answer. Ask what happens if the replacement property, loan size or affordability assessment differs. Terms can be lender- and contract-specific in South Africa, so I would want the lender’s explanation tied directly to this quote rather than relying on the general marketing description.

 

[bea.shaw]

The dates and loan assumptions have to match first. Otherwise even a detailed comparison will give a false winner.

I’d put the two offers side by side for the full 36 months, showing initial fees, monthly payments, the balance remaining at month 36 and any cost of selling or refinancing at that point. Paying a fee upfront is reversible in a way that adding it to the mortgage is not, because an added fee increases both the outstanding balance and the interest charged. The revised lender illustrations should provide the figures needed to check the sheet.

 

[alba_questions]

Also run an affordability case for the reset, not just the attractive fixed period. You don’t need to predict the future rate precisely: test several higher monthly-payment amounts and ask whether the budget still works. I’d make acceptance conditional on getting the 91-day timing clarified and receiving matching illustrations from both lenders.