Why your home loan interest rate is important
There are some important things to keep in mind when looking at property for sale in Soweto, and one of the main concerns you should have is the interest rate of your home loan. We detail just why this is an essential part of securing your dream home.
When looking at property for sale in Soweto, it is easy to get swept up in the process and lose concentration on some of the elements can end up costing you.
In this article, we put specific focus on the interest rate of your home loan, because this small number on your contract can make a massive difference.
Taking on a home loan is not a small commitment, as you are generally committing yourself to debt for the next 20 years. This is not front of mind when looking at your dream home, but neglecting this factor can put you under serious strain in years to come.
Take this small sum as an example. Having an interest rate of Prime plus 3% (which works out to 13% interest) on a home loan of R500k will see you pay R5900 a month for your home. Shaving just 2% off of this will end up putting R700 back into your pocket each month. Now, work that out over 20 years and you will see just how important it is.
To assist you in hopefully securing a better rate, there are three things that you could actively do during the process. Firstly, don’t be scared to negotiate. You may be over the moon that your application was successful, but many people don’t think about questioning the rate and asking for better. Many times, banks may be willing to discuss it further.
Also be aware of your credit score as this determines the risk factor in your application. A bad credit score can ruin the deal, so check out your free credit report once a year to make sure you are on top of it.
Lastly, if you have the finances available, consider putting down a larger deposit. You may be hoping to keep some cash on hand, but choosing to invest more upfront could end up saving you in the long run.
