Should you fix your interest rate?
Often new home owners are simply excited at the fact that they have been able to secure a home loan for their first house that they forget or neglect to consider some of the important factors of the home loan.
Whenever youâ€™re applying for a home loan you need to put much consideration into the current economic conditions since this can dramatic effect the interest rate changed on home loans.
Banks will usually negotiate Home Loan interest rates by one or two percent below the prime lending rate. The prime lending rate is set by the reserve bank and is often called the REPO Rate.
Although many different home loan products exist in South Africa, the two most common rate options you have is a Variable Interest Rate or a Fixed Interest Rate.
Letâ€™s explore the advantages of Fixed and Variable interest rates
Home Loans – Fixed Interest:
Whether youâ€™re dealing with ABSA, Nedbank, FNB, Standard Bank or SA Home Loans â€“ every top home loan provider in the country will offer you the option of fixing your home loan interest rate.
The advantage of a fixed rate is that youâ€™ll know exactly how much your bond repayments are going to be every month for a set period of time. SA Home Loans recently launched a product which allows home owners to fix their rate for up to 20 years.
So you never have to worry about an increase in the repo rate since youâ€™re the rate charged on your bond will be fixed.
Many home owners opt to fixed their rate since it offers peace of mind.
Home Loans â€“ Variable Interest:
The advantage of a variable interest rate is that when the repo or prime interest rate drops your will be paying less par month.
Therefore, before you decide on whether to fix your home loan rate or not it is important to seek help from a financial advisor and an experienced home loan consultant first.
Mortgage Originators are able to offer you all the assistance youâ€™ll need to secure the home loan product that best suits your needs.
For more information, complete the online form HERE and an experience home loans consultant will contact you immediately to assist.