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Fintech enters the bond origination market

Estate agency Leadhome has successfully launched Bondspark, a fintech company that is disrupting the mortgage bond origination industry.
The highest interest saving – the difference between the highest and lowest interest rates offered by the banks – that Bondspark has been able to provide clients is 3.9%. Picture: Shutterstock

Marcél du Toit, CEO and founder of Bondspark, explains that the idea behind the fledgling company was for an originator that could provide a free fully online service to clients trying to find the best home loan at the best interest rate.

Bondspark allows its clients to get a comparative home loan quote by applying on the client’s behalf to multiple banks using their innovative online application, at no cost to the client. As du Toit explains: “Bondspark was born in response to our clients’ need for an easier process when it came to home finance. What started as a small department within Leadhome that helped clients apply for home loans soon became a prominent business on its own, hence why we decided to spin the business out as a separate brand and target the whole market.”

Romy Zwiers, head of marketing for Bondspark, explains the thinking behind the brand. “The name Bondspark tells you about the vision we had for the company,” she says. “Our message is that consumers should be looking at a home loan as a long-term relationship that starts with a spark. Besides the online aspect, our differentiator is that we offer our clients a 20-year commitment rather than a once-off interaction. Bondspark’s future is focused on making everything about managing home financing much easier for the client.”

Romy Zwiers, head of marketing at Bondspark. Image: Supplied

In addition, Bondspark has plans to build a property management platform where clients will be able to track their mortgage bond over the period of the loan and calculate when a review will be optimal.

The website went live at the end of April and within six weeks had more than 5 000 visits, of which 86% can be attributed to new prospects for Leadhome. “Our data shows that 70% of our hits are coming from mobile, which reinforces our thinking behind launching a fully mobile online application,” says Zwiers.

“To date, we have an 80% bond acceptance rate, and we are also seeing steady growth in offers to purchase being submitted post the elections, despite the economic climate. The demand is driven by favourable lending rates from the banks as well as demand from first time buyers looking to enter the property market,” du Toit adds.

Digital signatures

While clients are currently required to sign a consent form so that Bondspark can process their applications, the company has plans to launch a digital signature facility in the next month or so – and once that is in place, the entire process will be online and seamless.

Between October 2018 and May 2019, Leadhome and Bondspark have seen an average purchase price of R1.69 million, with an average home loan application of R1.5 million. “The average LTV [loan-to-value] ratio is 90%, which tells us that consumers are saving for that home loan deposit,” du Toit says.

He adds that Bondspark has seen great approval rates from the banks, with lenders vying for business and offering competitive rates to consumers. “Our percentage declines over the last three months have been minimal at 20%,” he notes.

Marcél du Toit, CEO and founder of Bondspark. Image: Supplied

Small interest rate difference equals big money savings

The maximum interest saving – the difference between the highest and lowest interest rates offered by the banks – that Bondspark has been able to provide clients is 3.9%.

A difference of just 1% can have a huge impact on the client’s pocket in terms of their monthly repayment and annual saving. For example, let’s say Mary signs an offer to purchase for R1.6 million and has saved a 10% deposit of R160 000. If the bank granted her a loan at 11%, her monthly repayment would be R14 863. However, if the interest rate was dropped by 1% to 10%, her repayment would drop to R13 896. In the short-term, she would have an extra R967 in her pocket each month – over a year, that would equate to a saving of R11 604 and as much as R232 080 over the period of a 20-year home loan!

“When you realise that a 1% saving can mean a difference of almost a quarter of a million rand, it simply makes sense to use a bond originator and we offer clients the online functionality demanded by today’s society, an expert team of home loan advisors, bridging finance and insurance options (coming soon) to make their property journey seamless,” says du Toit .

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