Loan Options

Loan Options

Loan Options

Being able to buy a house is quite a luxury these days. A home loan can make your life a lot easier. A home loan provides finance to buy a house depending on your income and expenses. There are a variety of options to choose from and they are negotiable to suit your needs, within reason of course.

One option that is available from home loan brokers is a extended period bond. This means that instead of paying the bond of in twenty years, you can elect to pay it off in thirty years. You will be paying less each month in repayments and can often get a lower interest rate. The downside of an extended period home loan is that you will be paying interest for a longer period of time on a balance that decreases at a slower rate than a twenty year bond. So whilst it is more affordable on a month to month basis, it does cost more in the long run.

An home loan will also offer you the option of a fixed or variable interest rate. A fixed interest rate is set at the time of originating the bond. It is fixed and does not change for the entire period, no matter what the interest rate of other accounts does. A variable interest changes in accordance with the prevailing interest rate as set by the banks. With a fixed interest rate, you are safe from unexpected hikes in the prevailing interest rate, but also do not benefit from drops in the interest rates. The opposite is true for variable rate home loans. Should interest rates go up or down, your interest rate changes along with them.

Home loans are not only for buying a home. They can be used to build new homes. Because building any structure is expensive you need financing to be able to afford the materials and labour to build your home. You also need to buy land to build on. All of these can be catered for by a home loan specifically designed for this purpose. They allow you to make payments to the builder as you need them so you do not have to pay for everything all at once and risk being cheated by the building company. You will only have to start repaying the loan once its funds have all been paid out. This means that you are able to reap the rewards of the loan whilst paying for it and are not paying for something you have yet to see the benefit of. Qualifying for a building loan requires that you have a quote from an approved builder which ensures that your home is built according to the standard of the SABS.

Home loans offer a variety of financing options for you to consider when the time comes to buy your home or build a home if you cannot find your dream home. Building loans can protect you against noncompliant building companies and allow you to only start paying once the loan has been fully paid out. Consider all your options before choosing your loan and make sure you can afford the repayments.

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