Tips for securing a better interest rate on your home loan

Looking at property for sale in Johannesburg should be a fun process, but for many the home loan application process can turn things sour quickly.

One factor that can easily be overlooked is the interest rate, and this can impact not only your monthly cash flow, but also your ability to manage your costs going forward.

One of the biggest problems is that consumers are usually happy with the fact that their application is successful, and then fail to look ahead at how the interest rate could affect them.

To assist, we provide some tips to help you get a better interest rate which could save you a small fortune in years to come. To put things simply, qualifying for a home loan of around half a million rand with an interest rate of 13% would see you pay R5900 monthly. Getting the rate reduced to 11% would cut your monthly repayment by R700. Over 20 years, this is a significant saving.

The first thing you should do is assess your credit score. If this is positive, then the banks are more likely to offer you a good interest rate, while having a poor record can result in higher rates or even unsuccessful applications.

Next, you should not be afraid to negotiate. As mentioned above, the fact that your home loan was approved can be overwhelmingly emotional, but instead of just accepting the first quote you should attempt to negotiate. In many situations, the financial institution may be open to reaching a deal.

Lastly, where possible, consider putting down a higher deposit. This lessens the risk for the bank, which can help you secure a better interest rate.

These three tips could prove very useful during the application process and it may ensure that you are not left struggling with repayments in the future.