The interest rate of your home loan is no laughing matter

Property for sale in Durban remains a hot prospect for buyers around South Africa, and if you are currently in the market then you should certainly take note of the following advice.

When it comes to signing for a home loan, one important factor can often be overlooked, especially by first time buyers, but doing so will end up being a regret you have for years to come.

That factor is the interest rate of your home loan, and it can literally cost you thousands over the next 20 years.

If you are sceptical, then just consider the following sum. You receive a home loan of R500 000 over the course of 20 years. Your interest rate of 13%, which is Prime plus 3%, which seems reasonable as you are paying R5900 monthly.

However, a friend of yours gets the same loan, but at a reduced interest rate of Prime plus 1%. You may laugh at the fact that he is saving just R700 monthly, but in 20 years from now, he will have saved R168 000 in interest, which you would have happily handed over.

With that out of the way, there are some things that you can do to help improve your chances of getting a better rate. The first thing is to work on your credit score. The bank will assess the risk in providing you a home loan by looking at the way you handle your debt. So make sure you look at your free credit report once a year and make changes to improve your score.

Then, during the process of applying for your home loan, you should definitely try to negotiate on the rate. Many buyers may avoid the conversation, but in all honesty you have nothing to lose, but thousands to gain.