NGL Attorneys | Commercial, Business and Property Law

In today’s economy, homebuyers often struggle to scrape together the money needed in order to buy their dream homes. Therefore, home loans have become so popular among prospective home buyers. New home loan providers noticed this and entered the mortgage lending market in order to satisfy this demand. Prospective home buyers are now spoiled for choice when it comes to choosing a provider to finance their property purchase. But that’s not all. Prospective home buyers can now choose the perfect home loan type that will be suitable for them specifically. There are several home loans available to prospective home buyers in South Africa. We will provide an overview of these types of home loans below:

    1. Fixed-rate home loan

Fixed-rate home loans have a fixed interest rate for a certain period, which covers one or two years. The fixed rate will always be higher than the base home rate, but you will be protected against increasing rates. This loan helps you to avoid increased interest rates, however, if the interest rates drop, you will still be paying the same fixed rate.

    1. First-time buyers home loan

First-time buyers home loans are very popular among first-time home buyers who want to invest in their first home but do not have the money at hand to put down on a deposit. Banks and other lenders are now open to lending more than 100% of the purchase price, which includes the registration and transfer costs.

    1. Variable home loan

Variable home loans have their interest rate attached to the base home loan rate, which goes up and down, depending on the amount of the loan. If the home loan base rate goes down, the interest rate follows, however, it also works the other way round.

    1. Capped rate home loan

Capped rate home loans provide you with the extra security of a variable interest rate without locking in a fixed rate. These home loans protect you against interest rate increases. However, it should be noted that qualifying for these types of home loans are quite difficult.

    1. Step-down home loans

Step-down home loans are popular among homeowners who are close to retirement. With this type of loan, the rate offered to you by the bank is gradually lowered every year or 6 months. This saves you a lot of money. This home loan is very similar to switching home loans, as switching your home loans enables you to secure a significantly lower rate.

Whichever home loan you choose, rest assured that there is a home loan out there for you that will enable you to make the biggest investment of your life; buying a home.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

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