Buyers who can put down a deposit may qualify for an interest rate concession, which could save them thousands of rand on the total cost of their home loan, he says.
“For example, an interest rate reduction of just 0.5 percent on a 20-year bond of R1.5 million translates into a potential saving of more than R120 000 in interest, as well as a total of about R6 000 a year off the monthly bond instalments,” he says. First-time home-buyers should always seek pre-approval, he says.
“Most of the home loans have a variable interest rate. You might say: ‘Okay, I can afford a R10 000 repayment a month’, but in two years’ time the interest rate goes up, and all of a sudden you can't afford that. Be wary of your income and don't always go out to the maximum of what you can afford,” he says. Coetzee says if you are planning on applying for a home loan, you can improve your financial situation by doing the following:
* Dust off your budget. By this time of year, many consumers are no longer sticking to the budget they drew up in January. But if you're serious about reaching your financial goals, you need to know exactly where your money is going every month.