Home Loans: There are many great reasons to refinance your home loan and it may be a wise financial decision. Some of the more popular reasons to refinance include lowering your interest rate, lowering monthly payments, debt consolidation and decreasing the home loan term to build equity quicker.
But, before you decide to refinance you need to the sums to determine if the cost of refinancing would be worth. Keep in mind that if your goal is to save money, you to calculate your break even point. Your break even point is the point where your savings covers the cost of refinancing a home loan.
As a rule of thumb, the longer you intend on staying in your home the more feasible it will be to consider refinancing.
It is a fairly simple calculation to determine your break even point which will help you to figure out when you will start saving money.
Add up the costs (prepayment penalties, registration costs etc.) of refinancing your home loan and divide the total costs by the amount you save each month. This will show you the number of months it will take before you start seeing real savings.
For example, if you refinance your home loan and your closing costs end up to be R14,500. Also your mortgage payment have gone down from R4,900 to R4,000 which translates into a R900 monthly saving. Divide the R14,500 by R900 which means that it will take you 16 months to break even.
This is a fairly simple explanation, but it should help you to calculate if you should refinance your home loan or not. In the above example if you plan on staying in your home for longer than 16 months it will be a wise decision to refinance.
To find out more about home loans and other possible pitfalls you're likely to encounter, visit our website through the links.
Friday, January 8, 2010
Wednesday, December 30, 2009
Keep This In Mind When Applying For A Home Loan.
When buying a house you will hear a lot about the different types of home loans. So there are various things you have to take into account before making your final decision.
For starters you can use a home loan calculator to find out what your monthly instalment will be. This will give you a ball park figure you can use to determine the maximum home loan amount you can afford to apply for.
Don’t make the mistake of taking the rate you get from your bank and think you cannot do better,. Instead compare the interest rates from different financial institutions to ensure that you will be able to choose a loan that fits your financial institution.
Of course, if you would really like to stay at your current bank you could always get interest rates quotes from other banks and if those are lower present them to your bank. In all likelihood, your bank will try to better those rates.
Be sure to look at the overall package the lender is offering, because some loans are structured in such a way that although you might be paying a low interest rate initially you might be paying more interest rate in the future.
Also check whether you have signed for a variable or fixed interest rate and make sure that you can change your rate preferences when interest rates change. Failure to do this could make life difficult for you in the future.
For example, if you have opted for a variable rate home loan and interest rates goes up over a period of time you could end up in a situation where you cannot afford your home loan anymore and be forced to sell your home.
Obviously in such a scenario it would be best to rather opt for a fixed rate, since you will have the security that your monthly repayments would not change. Conversely if you start out with a fixed rate home loan and rates start going down, you’ll end up paying more for your home loan than what’s necessary.
For more home loans information visit: http://www.gpfmortgage.co.za/sa-home-loans.html
For starters you can use a home loan calculator to find out what your monthly instalment will be. This will give you a ball park figure you can use to determine the maximum home loan amount you can afford to apply for.
Don’t make the mistake of taking the rate you get from your bank and think you cannot do better,. Instead compare the interest rates from different financial institutions to ensure that you will be able to choose a loan that fits your financial institution.
Of course, if you would really like to stay at your current bank you could always get interest rates quotes from other banks and if those are lower present them to your bank. In all likelihood, your bank will try to better those rates.
Be sure to look at the overall package the lender is offering, because some loans are structured in such a way that although you might be paying a low interest rate initially you might be paying more interest rate in the future.
Also check whether you have signed for a variable or fixed interest rate and make sure that you can change your rate preferences when interest rates change. Failure to do this could make life difficult for you in the future.
For example, if you have opted for a variable rate home loan and interest rates goes up over a period of time you could end up in a situation where you cannot afford your home loan anymore and be forced to sell your home.
Obviously in such a scenario it would be best to rather opt for a fixed rate, since you will have the security that your monthly repayments would not change. Conversely if you start out with a fixed rate home loan and rates start going down, you’ll end up paying more for your home loan than what’s necessary.
For more home loans information visit: http://www.gpfmortgage.co.za/sa-home-loans.html
Thursday, December 24, 2009
What Kinds Of Home Loans Are Out There?
Home Loans: There are many different kinds, you must just figure out which is the best for you.
First and foremost, there is the most normal one of all, and that's the variable rate home loan. This kind of home loan is available at all banks and institutions over any period of up to 30 years. The only downside is if interest rates go up, yours will also go up, but should it come down, you'll also benefit because then your rate also comes down.
Secondly you have fixed rate home loans. These type of loans are exactly what their name implies, the rate doesn't change while the rate is fixed. So, you'll always know what you'll pay at the end of the month. The upside is that should the interest rate go up, your rate won't change, but the downside is that if the interest rate comes down, your rate won't change. This type of loan is also available at all major banks and institutions.
Third you have interest only home loans. This is where you pay only the interest on the loan on a monthly basis and then at the end of the 20 year loan term you re-finance the capital. This is a good option if you are only planning on staying in the home for a short period or if your are bying low to sell high.
Lastly you have the low risk capped home loan. This loan is not freely available, but it is definitly a nice one to have if you want to control your payments in an uncertain income market. This is where your home loan installment is capped at a certain percentage above prime, perhaps 1 or 2% for a fixed period of 2 years. Your home loan interest rate will move up and down below this "ceiling" rate as the prime interest rate fluctuates, but will never move above the "ceiling" rate.
These are the home loans options you have available when applying for a home loan. If you need more information please do not hesitate to contact us through our website : http://www.gpfmortgage.co.za/sa-home-loans.html
First and foremost, there is the most normal one of all, and that's the variable rate home loan. This kind of home loan is available at all banks and institutions over any period of up to 30 years. The only downside is if interest rates go up, yours will also go up, but should it come down, you'll also benefit because then your rate also comes down.
Secondly you have fixed rate home loans. These type of loans are exactly what their name implies, the rate doesn't change while the rate is fixed. So, you'll always know what you'll pay at the end of the month. The upside is that should the interest rate go up, your rate won't change, but the downside is that if the interest rate comes down, your rate won't change. This type of loan is also available at all major banks and institutions.
Third you have interest only home loans. This is where you pay only the interest on the loan on a monthly basis and then at the end of the 20 year loan term you re-finance the capital. This is a good option if you are only planning on staying in the home for a short period or if your are bying low to sell high.
Lastly you have the low risk capped home loan. This loan is not freely available, but it is definitly a nice one to have if you want to control your payments in an uncertain income market. This is where your home loan installment is capped at a certain percentage above prime, perhaps 1 or 2% for a fixed period of 2 years. Your home loan interest rate will move up and down below this "ceiling" rate as the prime interest rate fluctuates, but will never move above the "ceiling" rate.
These are the home loans options you have available when applying for a home loan. If you need more information please do not hesitate to contact us through our website : http://www.gpfmortgage.co.za/sa-home-loans.html
Thursday, December 10, 2009
How Much Will The Banks Give Me if I Apply For a Home Loan
SA Home Loans: South African banks currently all vary when it comes to granting home loans.
Will I get 100%, or must I give a deposit to qualify?
The short answer would be yes and no. Why? Well as mentioned, each bank as it's separate qualifying criteria along with their individual appetite for loan to value (LTV)
LTV is the relation between the value of the property and the bond on that property. So, if a bank has a LTV cap of 90% it means that the bank is only willing to grant a bond of 90% of the purchase price (when you are buying) or value (if you are applying for a 2nd bond)
So, if 90% is the cap and you have a home to the value of R1 000 000 or you are buying a home for that price, the bank won't give you a home loan of more than R900 000.
So, lets sum up what percentage each of the banks are offering.
When buying a home, you will automatically qualify for a 105% home loan (purchase price plus attorney fees) if you have an income of less than R15 000 pm (single or joint)
All other purchases are as follows:
ABSA Home Loans:
90% of the purchase price up to R1.5mil if you bank at ABSA
70% if you don't bank at ABSA
Standard Bank Home Loans:
90% up to R2.5mil irrespective if you bank there or not
FNB Home Loans:
100% up to R2mil irrespective if you bank there or not
Nedbank Home Loans:
100% up to R3mil irrespective if you bank there or not.
If you are interested in applying for SA Home Loans now or in the near future don't hesitate to contact us if you need more information or advice.
Will I get 100%, or must I give a deposit to qualify?
The short answer would be yes and no. Why? Well as mentioned, each bank as it's separate qualifying criteria along with their individual appetite for loan to value (LTV)
LTV is the relation between the value of the property and the bond on that property. So, if a bank has a LTV cap of 90% it means that the bank is only willing to grant a bond of 90% of the purchase price (when you are buying) or value (if you are applying for a 2nd bond)
So, if 90% is the cap and you have a home to the value of R1 000 000 or you are buying a home for that price, the bank won't give you a home loan of more than R900 000.
So, lets sum up what percentage each of the banks are offering.
When buying a home, you will automatically qualify for a 105% home loan (purchase price plus attorney fees) if you have an income of less than R15 000 pm (single or joint)
All other purchases are as follows:
ABSA Home Loans:
90% of the purchase price up to R1.5mil if you bank at ABSA
70% if you don't bank at ABSA
Standard Bank Home Loans:
90% up to R2.5mil irrespective if you bank there or not
FNB Home Loans:
100% up to R2mil irrespective if you bank there or not
Nedbank Home Loans:
100% up to R3mil irrespective if you bank there or not.
If you are interested in applying for SA Home Loans now or in the near future don't hesitate to contact us if you need more information or advice.
SA Home Loans - Dispelling South African Home Loan Myths
Throughout the years myths have been passed on regarding who can or can not qualify for a SA home loan. If you have been thinking of how nice it would be to possess your own home but don't think you would qualify for a home loan, here is a list that will dispel the myths and help you determine if you can finally set about house hunting.
SA Home Loan Myth #1:
The only home loan to consider is a 30 year fixed rate mortgageYears ago when buying a home a 30 year fixed rate home loan was one of the only ways to go about obtaining an affordable mortgage.
Mortgage companies have worked to change the options available to potential home loan borrowers. A loan officer can appraise your situation to see if a variable rate mortgage would suit your needs and discuss your best option.
SA Home Loan Myth #2:
Having a Home in Mind is Best to have before you talk to a home loan professionalAlthough the idea may be nice, you may find out after speaking to a mortgage specialist, that you can not afford the home you have picked out. What you may think you could afford may not work out that way with all things considered.
Laying everything out and discussing your situation with a mortgage professional will save you any disappointments.
SA Home Loan Myth #3:
Always get a home loan from your bankThis could very well end up being the worst thing you can do. Over time the mortgage market has become more competitive and more lending companies have become available to offer better loan packages to potential home buyers.
Shopping around and finding a suitable SA home loan lending company could save you money. There are now many companies you can find online to review rates and receive a quote from if contacted.
When dealing with these companies, make sure they have the proper notice to show you that they have an encrypted site and all of your personal information will be protected from getting into the wrong hands.
SA Home Loan Myth #4:
Bad Credit-No ChanceYears ago, mortgage companies would not consider you for a loan with bad credit, with the industry now becoming more competitive, new rules have been introduced.
People who have found their credit damaged by poor choices in the past, are now being given a second chance and can qualify for a SA home loan from select lenders. If you have bad credit, little or no credit, talk to a SA home loan specialist to see what your options are.
SA Home Loan Myth #5:
If you have no down payment you will have to pay huge interest ratesMany people are under the assumption that if you do not have a down payment, you will be stuck having to pay a huge interest rate and extra mortgage insurance coverage.
If you do not have a down payment fund, do not let that stop you from inquiring into your options to combine your loans and get that home you so desire. These are the most common of the myths surrounding home loan approvals.
Friends and family may not always know what is the latest in the home loan industry standards. Speaking to a qualified SA home loan professional can spare you time and aggravation and get you started picking out that house of your dreams.
So, before applying for SA Home loans, think about your situation and ask your mortgage broker for advice. Visit our home page on http://www.gpfmortgage.co.za for more information
SA Home Loan Myth #1:
The only home loan to consider is a 30 year fixed rate mortgageYears ago when buying a home a 30 year fixed rate home loan was one of the only ways to go about obtaining an affordable mortgage.
Mortgage companies have worked to change the options available to potential home loan borrowers. A loan officer can appraise your situation to see if a variable rate mortgage would suit your needs and discuss your best option.
SA Home Loan Myth #2:
Having a Home in Mind is Best to have before you talk to a home loan professionalAlthough the idea may be nice, you may find out after speaking to a mortgage specialist, that you can not afford the home you have picked out. What you may think you could afford may not work out that way with all things considered.
Laying everything out and discussing your situation with a mortgage professional will save you any disappointments.
SA Home Loan Myth #3:
Always get a home loan from your bankThis could very well end up being the worst thing you can do. Over time the mortgage market has become more competitive and more lending companies have become available to offer better loan packages to potential home buyers.
Shopping around and finding a suitable SA home loan lending company could save you money. There are now many companies you can find online to review rates and receive a quote from if contacted.
When dealing with these companies, make sure they have the proper notice to show you that they have an encrypted site and all of your personal information will be protected from getting into the wrong hands.
SA Home Loan Myth #4:
Bad Credit-No ChanceYears ago, mortgage companies would not consider you for a loan with bad credit, with the industry now becoming more competitive, new rules have been introduced.
People who have found their credit damaged by poor choices in the past, are now being given a second chance and can qualify for a SA home loan from select lenders. If you have bad credit, little or no credit, talk to a SA home loan specialist to see what your options are.
SA Home Loan Myth #5:
If you have no down payment you will have to pay huge interest ratesMany people are under the assumption that if you do not have a down payment, you will be stuck having to pay a huge interest rate and extra mortgage insurance coverage.
If you do not have a down payment fund, do not let that stop you from inquiring into your options to combine your loans and get that home you so desire. These are the most common of the myths surrounding home loan approvals.
Friends and family may not always know what is the latest in the home loan industry standards. Speaking to a qualified SA home loan professional can spare you time and aggravation and get you started picking out that house of your dreams.
So, before applying for SA Home loans, think about your situation and ask your mortgage broker for advice. Visit our home page on http://www.gpfmortgage.co.za for more information
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