What is a home loan?
A home loan is an amount of money borrowed by an individual, usually from financial institutions and companies that lend money. You are essentially borrowing money from a financial institution to help purchase your desired home.
To make commercial sense for the home loan provider, interest is charged on the home loan. Interest is, in most cases, calculated and linked to the Prime Interest Rate.
A home loan is quite a huge commitment that needs to be met, but there are ways in which you can make your home loan work for you:
Increase your Home Loan Repayment
You can reduce the amount of interest you have to pay on your loan by increasing your bond repayment. A great practice when there are interest rate cuts is to try keep paying the same instalment before these cuts were introduced.
Whether you are at the beginning of your home loan period, or near the end, you can still make a considerable saving in the end by paying off your home loan more quickly. Maybe you received a bonus or received more income than usual, consider using it towards your home loan payment.
Build Up a Good Credit History
Always ensure you pay your home loan instalments on time. This could help improve your credit rating. Financial institutions look at your credit rating and history before they make the decision on whether or not to grant you a home loan. They will also charge you a certain interest rate based on your rating/history. Thus, you could be potentially saving yourself money for future home loans.
What Must I do if I have Difficulty Paying my Home Loan Instalment?
It is imperative to try your best to pay your monthly home loan instalments. Missing an instalment not only effects your credit scoring negatively, but also increases your capital amount upon which your interest is calculated (you will end up paying more).
If you are struggling, you need to keep in contact with your lender. Do not avoid contact. Often lenders will work with you and reach alternative arrangements which may help you in your current situation.
Look After your Investment, Your Asset
Be proud of your home. It is one of the most important investments you will make in your life. To ensure your home is in tiptop shape, you would need to maintain your home. While it might cost a bit to maintain, it is a lot cheaper than replacing or fixing something that has broken.
Having a well maintained garden greatly improves the curb appeal and the value of your home. Keep your gutters clean and maintain your wooden doors and window frames, which can deteriorate and crack in the harsh South African climate.
Owning a home is a major achievement for anyone in life. Make sure you stay on top of your home loan and make it work for you. Are you interested in our home loan process? Visit our website by clicking here, or reply to this email, one of our estate agents will gladly assist you in purchasing your future home.