How to get the lowest interest rate...

From the Banks

Saving you money on your mortgage payments by getting you the best Interest rates at the banks.

Table of Contents

📑 Introduction: Frustrations and why this guide exists

📍Strategy 1: Horses, Courses & The Jockey

🔍 Real-life case study: Convincing the bank to lower the interest rate.

📍Strategy 1 continued: Horses, Courses & The Jockey

~ Choice No#1: Save money now, or Save money later - Understand where your natural wealth creation flow is, so it doesn't feel like work.

📍Strategy 1 continued: Horses, Courses & The Jockey

~ Strategy 2: 30 in 20

🔜Next steps you can take to get started

INTRODUCTION

And Why This Guide Exists

I created this guide for every working professional who’s ever asked:

1 - “How can I save money on my bond repayments! "

2- "How can I pay off this house quicker"

3 - "How can I convince the bank to give me a better rate"

In a world where costs keep rising, and salaries keep stagnating, we need ways to cut our own costs and not be left falling behind.

Its fiercely frustrating that to still be paying a high monthly interest rate.

This guide was born from that same frustration.

What I discovered is that it comes from not knowing the rules that banks operate by. Like any business, Banks operate by a set of rules. And If you know the rules, you can win.

Through networking with bank employees, actuaries and business quants, to research, studying an MBA and good old fashioned trial & error, I discovered numerous rules that the banks operated by.

The most prolific of these rules are what I termed:

The horses, The courses & The jockey

The 30 in 20.

This guide shares how I apply those 2 — and how you can too, using simple strategies that work. to save you monthly

For more than two decades, I've used strategies like this to fund my travels and life. I share it here so you can do the same.

To succeed, you have to apply Their Rules.

The Case Study

Heathfield, Western Cape - In Short

The Opportunity

I approached an Estate Agent letting her know I'm looking to solve problems for someone.

She smiled and let me know she had "Just the deal for me."

🔧 The Problem

Nine. Yes 9. Ayisishiyagalolunye. Nege. Neuve people in a 39m2 flat!

Each taking turns to sleep and then go to work.

& They were not keen on moving out.

💡 The Solution

Offered R450k - a full 20% under the asking price, which was already the cheapest in the complex.

Paid the tenants 2 months rent to leave.

secured a lease for a new tenant before taking ownership which more than covered the mortgage.

Pulled the property to prove it was being bought below market value

Pulled the area report to show the upward trend

Pulled the crime stats report showing it was a safe neighborhood

Presented all of that with the OTP and signed lease to the banks.

📑 The Result

Secured a 100% mortgage at prime minus 0.25%.

No Personal Surety!

✅ The banks never came to inspect

✅ It was bought well below market value

✅ We solved her pain — and setup a profitable investment

Pro tip - Don't over capitalize

I made a big mistake here and got carried away fixing it up.

I spent way more than needed to fix it up.

But despite that, I sold it just over 13 months later for R650k.

Strategy 2: The Horse, The Course & The Jockey

Unlike strategy 2, This is not a one stop guaranteed solution, and nor is it procedure that can be followed verbatim. Instead, its the sum of the parts which together, helps the banks make a decision about lending money to you... in your favor.

.

As such, getting all three right will drastically raise your chances for a lower interest rate, and a 100% mortgage

The Horse

These are the houses and for this, you will need to answer a few questions and get a few reports.

Banks lend money, which is risky, and as such they increase the interest rate to insure that risk. But what is risky for them?

Over the years I've seen three broad based criteria being applied:

1 - How much is the property worth, versus how much are you lending?

This is the debt coverage ratio & The higher the ratio, the higher the interest rate will be.

So when I paid R1.1 Million for a property in Pretoria worth R1.65 Million , the banks looked at this favorably and gave me a 100% Mortgage, at prime less 1.5%!

When last did you get 100% mortgage and at what rate was it at?

The reason for that is, If I didn't pay the mortgage, and they need to enter the distressed property route (more on that in another How To Guide),there is a good chance they can still sell the property and not loose money on it.

In contrast, If you buy a property at R1.65M and its worth 1.65M, your chances of a 100% mortgage at an optimal interest rate are very slim indeed - The risk for the bank is just too high.

Rule 1 - Buy Below Market Value!

2 - What area is it in

The more secure the area, the lower the risk. The more up and coming the area, the lower the risk. Any sudden changes that affect the security posture of the area and their risk goes up. And for banks, Risk means increased interest rates and lower loan to value mortgages.

In one instance we secured a great property in Johannesburg at R300K below market value. We secured the deal and started our research.

When we pulled the crime stats report, we noticed an uptick in burglaries and break in's so we we took a drive around the neighborhood. Apart from a few run down buildings, all looked fine.

Going back at night however, showed a different view. Less than 500M away was a building, which by day looked fine. But at night, It was what it was being used for as a Night club / tavern / brothel / drug den. A bit more research later and we discovered it had been a hijacked building.

Banks do not like risk, and risk like that can bring an entire area down making it tough to get great financing. They will finance, but not at 100% and not at prime.

RULE 2: Run a full area evaluation ... including crime stats

3 - What condition is the house in?

Over the years of buying residential property, I've noticed a trend from banks. When the property is under a certain value, they never sent anyone out to physically inspect the property. They just ran a desktop evaluation

But, as soon as it crossed a certain value, they come out to inspect.

Rule 3: Buy residential property below the threshold

Finding The Deal

I generally stick to 10 strategies to attract deals to me. There are more. But these work for me.

And yes, when I first started, this sounded complex - like learning to drive a car!

But ... once someone shows you how, it becomes second nature.

The Strategy I used in Finding this Investment Grade Property

🧑‍💼 Build Relationships with Agents

🧠 Network in Investor Communities

Pro Tip - If your new or starting out, choose 3 that you like, and master them first.

I had been chatting for nearly a year with an agent and an investor. We had already shared what we each wanted, and it all came together in this property.

Strategy 2: The Horse, The Course & The Jockey

The Course

Courses are the entities in which you buy a property in, of which there are three:

1 - Personal name

2 - A Company name

3 - In a Trust

The pro's and con's of each entity, how you structure and interconnect them for legal protection, why to use them for generational wealth, which gives the lowest tax benefit for the flip, is way beyond the scope of this how to guide. In fact, In fact, I've collected over 4 hours of lessons in my Vault just on this topic! Its a big topic. and one you want to spend time on and digest over time.

What is important for this How To Guide and this case study, is that I bought it in a company name.

buying in a company name goes against what I used to believe, and others still do believe, which is - Banks wont lend to companies.

That's BS! In fact, banks like it. When buying in the name of an entity such as a PTY or Trust, banks have seen me as a more professional investor. This is due in part, that PTY's and Trusts have Annual financial statements to produce which provide oversight and a level of required professionalism.

Entities protect us, they protect the asset, and this gives the bank more comfort. So do not be fooled when people say:

"If you buy in a company or a trust you wont get good rates or you wont get 100% bond" ~ I've received 100% bonds and great interest rates for both PTY's and Trusts.

Before we begin with the Jockey (Thats you by the way) I need you to think about the following question

Do You Want Your Savings Now? Or Do You Want Your Savings Later?

The goal I personally strive for is savings now.

But we are not all the same.

When I coach people, we go through a series of wealth profile tests. partly because I need to know how to get the best out of you, but mostly, to help you, make your own decisions based on what suits you best.

Some people are Accumulators, and the Accumulator is the safest of the profiles, relying on a system of small steps to achieve success. Warren Buffet is one such accumulator.

In other words they prefer to accumulate over time .. be that for savings or earnings. They will more than likely choose savings at the end.

Ps: How do accumulator's buy property... one solid brick and mortar at a time that is a steady earner and rises in value over time.

Others are like me, Star profiles. We are quick on our feet, make bold decisive decisions, and the more daring of the wealth profiles. Vanilla Ice (Yes, you can now stop, collaborate and listen) is a famous Star Profile and has built a multimillion-dollar empire flipping and renovating properties

We love to spend money. Not in 30 years. Not in 10. But now. So we will more than likely choose the short terms savings each time.

PS: How do Stars buy property ... Big, flashy, bold flips that we share with the world!

There are 8 more profiles - Lords tend to cashflow, deal makers to estate agencies , Mechanics to Airbnb's, and traders to arbitrage.

Which one are you...?

This will determine where you will most likely find joy, and where you are most likely to succeed!

Strategy 2: The Horse, The Course & The Jockey

The Jockey

Last, but certainly not least. And probably the most important of the three, is you.

You, your buying behavior, your lifestyle. You.

Of which these are critical:

1 - Credit record

2 - Affordability

Credit record

As someone who used to buy things cash, My thoughts were, pay cash, don't have debt, and you'll be fine. Boy was I wrong and boy was I a poor investment to the bank. No debt, meant no credit record. No credit record meant no proof I could manage a long term payment structure. And in South Africa, where data means more than a relationship, that means no property empire.

The higher the credit score, the more likely you are to get better interest rates from the banks

Affordability

When applying for a bond, the banks’ first consideration is whether you can afford the monthly repayments. This is measured through your salary-to-debt ratio, which compares your income to your existing financial commitments. Banks typically want to see that your monthly debt repayments (including the new bond) do not exceed around 30% of your gross monthly income.

To prove this, you’ll need to provide recent bank statements and payslips. These give the bank a clear picture of how much you actually earn and, just as importantly, how much you spend each month. If your statements show consistent high expenses, frequent overdrafts, or irregular income, your affordability score drops, limiting the size of the bond you qualify for.

On the other hand, demonstrating steady income, disciplined spending, and available cash flow will increase your maximum bond approval and help you secure the lowest possible interest rate.

👉 Quick Tip: This is also why many investors choose to buy property in a company structure. When you purchase through a company, the affordability is tied to the business each time, which means each new property doesn’t eat away at your personal affordability. This can make scaling a property portfolio far more sustainable.

WHY THIS STRATEGY WORKS IN SOUTH AFRICA

💥 You won’t Just “Find a Cheap Deal” — You Solve a Real Problem 💥

This isn’t luck. It isn’t a random deal. Its not get rich quick.

Its a strategic and tactical choice.

And here is why it works

Banks are tightening lending.

Even with a good income, many professionals can’t get the mortgage they deserve due to a high salary to debt ratio and maxed out affordability. Proving you are credit worthy massively ramps up your investing possibilities.

Strategy 2: 30 in 20

Take a 30 year loan, and pay it off at the 20 year monthly installment rate

Looking into the table below for the 30 year option, you can see that whilst you pay less monthly,

Over the long term, you are paying back over R3.6 million Rand. Not ideal

On the 20 year option, you are paying a higher monthly amount,

over the long term, its dropped to R2.6M Rand.

That's a great long term savings of R1M Rand

As they say though, "But wait, there is more"

If I take out a 30 year mortgage and pay it off at the 20 year monthly installment amount,

I still pay the higher monthly installment amount,

But the overall repayment has lowered to R2.4M Rand

A further savings of R200K on top of the R1M Rand savings

You pay the same monthly installment that you would on a 20 year loan, but you take out a 30 year Loan and pay it of sooner.

Note that we did nothing major here, we just structured the loan to suit our needs.

A further benefit of this if you have an access bond, is that you will be able to access the additional payments you made, if that rainy day ever comes. .