Two actions you can take for a better interest rate

So you’ve been looking for months, settled on the property for sale in Ladysmith that ticks all of your boxes and have now approached the bank for a home loan.

This is the usual process for many buyers, but once the application comes back successful, all common sense can quickly fly out the window. This is not said in a negative way, but simply pointing out that it is an emotional time and the possibility of owning your home can be a little overwhelming.

The importance of keeping your head in this situation is essential though, and more importantly, taking not of the smallest of details in the contract you are about to enter.

A small but crucial factor is the interest rate, and it is an area that many people can neglect. Doing this is going to end up costing you though, and making potential changes to your interest rate may be easier than you think.

Saving just a percent or two can end up putting thousands back into your pocket over the 20-year term, so don’t just sniff at the prospect because of a few hundred rand a month.

This is best showcased by revealing that a 2% saving on your interest rate of Prime plus 3% on a home loan worth R500k will put R700 back in your pocket per month – and over R160k over the course of your loan.

Two things that you could do to try and adjust the rate are:

Increase your deposit

You may have approached the process hoping to pay as little deposit as possible, but sacrificing that extra cash now could save you big going forward.

Negotiate with the bank

Yes, you are entitled to ask the question and ask for a better rate. If the bank is willing to offer you the home loan, you may be surprised in their willingness to close the deal too.