Home Loan Interest Rate

[Shirou]

Myself and the Wife just got approved for our first Home Loan.. and so far 1/4 Banks came back to us since we handed in the papers yesterday..

This is for R920 00 Home Loan

They are offering us 11.20% Without any Deposit.. And breakdowns below with deposit.. And this is for 360 Months

* R46 000 Deposit = 10.65%
* R92 000 Deposit = 10.50%

So my question is.. the following:

* Should i do the deposit to lower my bond repayment on the 10.50% or 10.65% or just stick with 11.20% and dunno.. somehow use the R92 000 in another way if i want to do the full deposit available, but would like to lower the monthly bond repayment to have more money available for yourself.

* And the real important question would be.. should i apply for FIXED interest rate.. and for how long? Will the interest rate come down or go up in the next X years?

Any help would be appreciated

 

[Mike Hoxbig]

Take prime while you still can...

 

[Hamish McPanji]

Reduce the loan term to 240 months. The difference in monthly repayment is less than 10% .

 

[Shirou]

Take prime while you still can...

Meaning.. doing the R92 000 Deposit to get it down to 10.5%?

Reduce the loan term to 240 months. The difference in monthly repayment is less than 10% .

Thanks, will ask them to work out the bond repayment then on 240 months.

 

[Mike Hoxbig]

Meaning.. doing the R92 000 Deposit to get it down to 10.5%?

Yeah but try and get your term down to 20 years as well as suggested...

 

[Kr1mZoN]

Definitely try get the lowest rate possible. If you have the deposit, use it. Also as has been said rather pay the loan off over 240 months, over 30 years you are paying ridiculous amounts of interest.

May I ask which bank was the one that responded the quickest with the offer?

 

[Shirou]

Yeah but try and get your term down to 20 years as well as suggested...

Thanks, appreciate the feedback! Will surely ask to get 20 years cost now instead.

Definitely try get the lowest rate possible. If you have the deposit, use it. Also as has been said rather pay the loan off over 240 months, over 30 years you are paying ridiculous amounts of interest.

May I ask which bank was the one that responded the quickest with the offer?

Thanks for the feedback! It was ABSA, but i think it's because i am with ABSA

 

[Shirou]

And whats your guys thoughts on a Fixed rate? As i believe even if it's 10.5% the banks will add another .5% to make it fixed for let's say 2 Years?

Is Fixed rate a good option to go with?

 

[SauRoNZA]

Short of pulling out a calculator that interest rate adjustment seems about the same as it would be if you dumped the R92000 into the bond after the fact and offset the interest.

Which would be another way to go about it if you want to keep the money reasonably available for an emergency or whatever.

 

[SauRoNZA]

And whats your guys thoughts on a Fixed rate? As i believe even if it's 10.5% the banks will add another .5% to make it fixed for let's say 2 Years?

Is Fixed rate a good option to go with?

More like +2%.

Depending on the term of course.

 

[Hamish McPanji]

Thanks, appreciate the feedback! Will surely ask to get 20 years cost now instead.



Thanks for the feedback! It was ABSA, but i think it's because i am with ABSA

SA home loans came in with an offer that was lower than others for me. My bank rejected, the tossers!

 

[Shirou]

Short of pulling out a calculator that interest rate adjustment seems about the same as it would be if you dumped the R92000 into the bond after the fact and offset the interest.

Which would be another way to go about it if you want to keep the money reasonably available for an emergency or whatever.

hmm.. interesting for sure, something to think about, thanks!

More like +2%.

Depending on the term of course.

Outch.. do we see the Interest rate to go higher than 12% or more in the next few years?

SA home loans came in with an offer that was lower than others for me. My bank rejected, the tossers!

That's nice indeed! Perhaps i should try SA home loans as well, just trying to get interest rate below prime somehow and would prefer ABSA as i am with ABSA, so trying to negotiate with them.. so will see.

 

[SauRoNZA]

Outch.. do we see the Interest rate to go higher than 12% or more in the next few years?

The honest truth is nobody really knows.

If you get to the point of actually considering a fixed rate take the variable instead and pay it as if you had taken the fixed rate (boost the instalment).

That way if it does go up over the period you won't feel it anyway. If it doesn't go up you scored by overpaying and negating the interest.

****

Highly unlikely you'll get a rate below prime.

 

[Shirou]

The honest truth is nobody really knows.

If you get to the point of actually considering a fixed rate take the variable instead and pay it as if you had taken the fixed rate (boost the instalment).

That way if it does go up over the period you won't feel it anyway. If it doesn't go up you scored by overpaying and negating the interest.

****

Highly unlikely you'll get a rate below prime.

Thanks for the info! Just taking all info here and absorb as much as i can.. it really helps

 

[Shirou]

Standard Bank Came back with 11.25% 20 Years, No Deposit.

So still waiting on FNB and Nedbank i guess.

 

[Mike Hoxbig]

That's nice indeed! Perhaps i should try SA home loans as well, just trying to get interest rate below prime somehow

You're going to have a hard time unless you have a great credit record and a bunch of other factors...

 

[A3@MBB]

From your OP it sounds as if affordability is not a problem on a 100% loan.
Take a 100% loan (flexi something) on the best interest rate that you can find and in month 2 you drop the R92k as a additional payment.

The bank will most likely adjust your next repayments but don't let them. The R92k will be available if you need the funds for emergency. This way you pay off your house in 14 years instead of 20 or 18 instead of 30. Additionally you will pay about the half of the full term interest.

 

[Shirou]

From your OP it sounds as if affordability is not a problem on a 100% loan.
Take a 100% loan (flexi something) on the best interest rate that you can find and in month 2 you drop the R92k as a additional payment.

The bank will most likely adjust your next repayments but don't let them. The R92k will be available if you need the funds for emergency. This way you pay off your house in 14 years instead of 20 or 18 instead of 30. Additionally you will pay about the half of the full term interest.

Thanks.. something i'll think about as well