Standard Bank Home Loans With the property market slowing down, it is not unusual to find the banks launching new campaigns such as Standard Bank’s First Time Buyer promotion to boost their home loan business. The new home loan campaign aims to encourage First Time Home Buyers to enter the Read more…
Home Loan Tips: With interest rates so high currently many people will find themselves going through tough times financially. What we don’t realize is that this statement holds many reasons to be grateful for. The fact that you are going THROUGH your struggle, and not being overcome by it, means Read more…
Mortgage/HomeLoan Tips In a Moneyweb PowerHour show a listener called in to ask a very interesting question about interest rates in South Africa. After several interest rates hikes over the past 12 months the caller asked â€“ â€œIsn’t it time [The South African Reserve Bank] split the interest rates into Read more…
Every Rand that you are able to invest into your Home Loan is like a small soldier / builder that is just waiting to begin earning you more money.
If every Rand you invest is like your personal employee [who specialises in making more money] you should have thousands of ’employees’ waiting in your Homeloan – looking for work. Now for once you’re able to reverse the roles, and begin to make your HomeLoan work for you!
Home Loan Advice: everything you ask for, you will receive Previously I explained that the first step to getting a homeloan and owning a new property is to: Find out what it is you really want. Make sure you have a clear picture in your mind of that new house Read more…
Mortgage Advice: Switch my home loan As an existing homeowner you have bargaining power. Over the years your property value has risen sharply while your bond has grown smaller – it’s time to use your bargaining power to secure a lower interest rate and save on bond repayments. Let’s look Read more…
You’re about to learn how to reduce the interest paid on your bond and save more than R100k over the term of the loan.
Jason Bagley (visit his website) asks a question which I believe could help many South African homeowners save money.
He posted a question (here), asking whether it would be better to take out a 30 year homeloan but repay the loan based on what a 20 year loan would cost. Wouldn’t you save more?
Firstly, Jason is already on the right track here. The first step to building personal wealth is to reduce your debt.
In many instances we’re more interested in securing a homeloan for our “dream home”, but we pay no mind to the terms of the mortgage. I’m referring to the interest rate offered on your new (or existing) home loan.
Your home loan is most probably your biggest financial commitment, and it’s easy to understand that on an average sized mortgage of R500 000 the interest rate plays a huge roll in determining how much you’ll actually end up paying.
**With that in mind, let’s quickly look at whether a 30 year term or a 20 year is best, and then I’ll answer the question above.
– Or Just Skip to the Conclusion now.
The interest rate you’ll be offered is based on the risk the bank is taking in granting you the mortgage.
The lower the risk (the more like you are to pay off the bond) the better your interest rate will be. And the higher the risk, the higher the rate.
If you apply for a long 30-year term you’ll more likely get a higher interest rate than if you take your bond over 20 years.
So the shorter the term – the more likely you are to get a lower rate. Remember, the term is not the only factor affecting your interest rate.
**Now lets look at how much you’ll SAVE if you apply for a 30-year term (despite the higher rate) and repay the loan based on what a 20 year loan would cost: