Everything you need to know about home loans
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In short, a home loan is money that the bank lends you to buy the home that's right for you and your family. The bank will essentially buy the property on your behalf, allowing you to pay them back in affordable monthly instalments over a long period (typically 20 years), rather than you having to pay one big lump sum upfront.
Applying for your home loan
Before you can apply for a home loan, you'll need to get some paperwork together. If you are employed, you'll need three months of salary slips and bank statements, as well as a copy of your ID card and your marriage certificate (if applicable). If you are self-employed, the list of required documents is a little longer, and includes the following:
- A letter of drawings from your accountant
- Personal bank statements for the last six months
- Annual financial statements for the last two years
- Company registration documents
By far the easiest way to apply for a home loan is to allow ooba to do the hard work for you. Using this bond originator takes the hard work out of getting a home loan. Instead of filling in tedious paperwork multiple times for every bank, you just need to fill in everything once, and ooba will approach all the banks on your behalf, making sure to get you the best deal possible.
Interesting things about home loan interest
The interest rate that the bank will offer you depends on an array of factors. For starters, it will be linked to the current prime interest rate and the SARB repo rate. Also, every bank that you apply to has their own list of lending criteria, and their own calculation to determine how much of a risk lending you money is deemed to be. If you have a track record of being financially responsible, it is likely to work in your favour when applying for a home loan.
If you've got some money saved up when it's time to buy a home, those savings are likely to really work in your favour. Having savings does two things for your home loan application: it ensures that you have a deposit to put down on your property, which means you don't need to take a home loan for 100% of the money that you need to buy your property. Secondly, it shows the bank that you know how to be responsible with money. To get an idea of what your savings can do for you, spend some time looking at our repayment calculator and see how much your deposit could save you every month. Every cent counts!
However, it's not bad news for those who haven't been able to save. It is often possible to get a 100% home loan, meaning that home ownership can be a reality without having a deposit saved up.
Quick tips for managing your home loan the smart way
- If you are in a position to pay any extra money into your home loan every month - even if it is a small amount - do it. The more you pay into your bond, the quicker it will be paid off, and the less interest you will pay.
- When the interest rate drops, ask your home loan provider to not reduce your monthly instalment - remember that every little bit helps.
- If you have an access bond, then you will be able to withdraw any extra money that you've paid into your bond when you need it - and it will usually be available at a much better interest rate than what a personal loan or credit card would be able to offer.
Finding a home and applying for a home loan can seem like one of the most overwhelming tasks you have ever undertaken. The good news is that you are never alone in this process. Jawitz Properties and ooba are your property market #realpartners, and we will help you find and finance the property that's right for you.
Author: Jawitz Properties
