Discovery Bank introduces home loans with up to 1% interest rate savings

Source: Wikipedia.

By leveraging its established shared-value banking model, clients can reduce their interest rates by up to 1%. This is achievable through effective money management with Vitality Money and securing their home loan and property with Discovery's insurance products.

Clients can lock in a market-related rate upfront, and dynamically reduce interest repayments by managing their money well to save over the long term. Through this shared-value approach, the current Discovery Bank client base could save up to R2.8bn in interest repayments on their current loans, and with the same model, South Africans could save up to R12.2bn a year.

“This is a highly anticipated milestone for us as we open the virtual doors to our home loans ecosystem. Those looking to buy a new home or wanting to upgrade their home, can enjoy a full ecosystem of benefits and tailor-made services in the Discovery Bank app.

“Our clients have comprehensive homeowner support alongside our home loans, with protection products for their homes and family, access to additional financing of energy solutions, and various rewards,” said Hylton Kallner, chief executive officer of Discovery Bank."

Home loans meets shared-value banking

As clients manage their money well, they create less risk and more value for Discovery Bank. The behaviours that are rewarded, include saving, being adequately insured, investing for retirements, and paying off home loans faster.

The bank shares the value from these financial behaviours back with clients in the form of better interest rates and other rewards linked to the Vitality Money programme.

The better clients manage their money, the higher their Vitality Money status and the better their rewards. Through the combination of Vitality Money, the Home Loan Protector and Building and Contents Cover, Discovery Bank home loan clients can lower their interest rates by up to 1%.

All clients who take out new home loans, switch home loans or refinance their homes with Discovery Bank can qualify for the shared-value interest rate discount.

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Discovery Bank offers home loans up to 100% of the value of properties, with personalised interest rates over a range of repayment terms up to 30 years. In addition to financing for new home purchases, Discovery Bank clients can also switch their existing home loans, or refinance their homes with this new offer.

With both switching to Discovery Bank and refinancing unbonded homes, clients can unlock equity in cash based on the value of their homes.
Buying a home requires significant long-term financing, resulting in it being the largest source of debt for many South Africans. However, it is also the biggest asset class and offers long-term hedging against inflation.

Dynamic interest rates

Kallner says, “We feel motivated to change the landscape of homeownership. The unique nature of home loans means client and asset risk typically reduce over time. With high costs negatively impacting repricing or switching to a different bank, the result is that an estimated 60% of our clients are overpaying on their existing home loans today.

“The solution is not only a once-off credit reassessment, but a client-controlled dynamic interest rate that adjusts based on real-time changes in financial behaviour. With Discovery Bank home loans, clients can be certain they will get accurate risk-based interest.

“This ecosystem will give Discovery Bank clients a personalised home-loan preliminary offer in under five minutes, and a completely digital application process on our award-winning Discovery Bank app. Our clients will get all the support they need in the home ecosystem – all to make the process of buying and owning a home as seamless and stress-free as possible.”

With the new Discovery Bank Home Partner Network, clients will also get up to 30% back in Điscovery Miles on Discovery Bank purchases at select partner stores, including Coricraft, Dial-a-Bed, Nespresso, Patio Warehouse and Volpes, in the first six months of the activation of the Discovery Bank home loan.

The Discovery Bank home loan offering is administered by a dedicated team from SA Home Loans, following the initial in-app application.

SA Home Loans has over 24 years’ specialist mortgage experience. A dedicated SA Home Loans consultant will assist clients through the necessary administrative and regulatory requirements to complete a home-loan switch, refinancing or to purchase a new home.