home loans south africa

How Much Do 'Home Loans' Really Cost?

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It is now easier than ever before to compare South Africa homes. You can readily get quotes from all major lenders in the country online for free and compare them to pick the ideal product for you. Before you get to do this, it makes sense to learn more about the cost of these loans.

Home Loans: It's ALL about the interest rate

The interest is the major chunk of the cost of a home loan. It is expressed in percentages. It is applied on an annual basis. To get the actual interest amount that you will owe the lender, you need to use a mathematical formula or a special calculator application. The mortgage interest can be fixed or variable. If it is variable, you may pay more or less than initially planned depending on the situation in the financial market.

There are fees that you need to take into account as well when calculating the total cost of the loan and the monthly instalments. There is a loan arrangement fee which can be paid upfront or added to the loan. It is non-refundable so the latter option is usually recommended.

There are fees for the management of the loan, but they are often added directly to the principal. More importantly, there are often fees for refinancing and for repaying the loan early. Smaller miscellaneous fees can also be applied on an annual or monthly basis. It is your responsibility as a borrower to check them.

When you compare different South Africa home loans you need to calculate their full cost given the interest and the fees applied. Keep in mind that there are also fees and taxes associated with the purchase of a new property which have to be covered as well.