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
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