Discovery Bank this week launched its home loan product that will offer clients “competitive, personalised rates” based on their individual risk profiles.
It also said clients will be able to reduce their interest rate further by up to 1% if they use Vitality Money and take out homeowner’s and household contents insurance with Discovery.
“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,” the bank said.
Through this “shared-value” approach, Discovery Bank said its more than two million clients could save up to R2.8 billion in interest repayments on their current loans. According to Discovery, all South Africans with a home loan could save up to R12.2bn a year if they capitalised on the dynamic interest rate saving of up to 1%.
Hylton Kallner, the chief executive of Discovery Bank, Kallner said: “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.”
The financial behaviour that will result in a lower interest rate and rewards linked to the Vitality Money programme include saving, being adequately insured, investing for retirement, and paying off a home loan faster.
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, clients can lower their interest rate by up to 1%, the bank said.
Clients who take out new home loans, switch their home loans, or refinance their homes with Discovery Bank can qualify for the interest rate discount.
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.
The home loan product is administered by SA Home Loans, following the initial in-app application.
Kallner said clients will receive a preliminary home-loan offer in under five minutes, and a completely digital application process.
With the new Discovery Bank Home Partner Network, clients will also get up to 30% back in Discovery 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 Discovery Bank home loan.
