Real Estate Investor Magazine South Africa December - January 2014 | Page 37

RESIDENTIAL rate would need to have increased by at least 3% to 4% over the term of the loan. Goslett says that depending on the financial institution, most fixed interest rate agreements are fixed for a term of between two and five years, with exceptions given by certain institutions. “There are instances when a homeowner will be able to cancel their fixed rate agreement by giving a notice period, however in most cases the contract is only cancelled after the fixed period has elapsed or the property is sold. For this reason it is important for homeowners to carefully read through documentation and explore all options that are available to them before they sign,” he says. However, ooba continues to advise its clients to take steps to manage their interest, to save themselves money in the long term. Here is what Dyer recommends: Make repaying your bond a priority. Don’t think of it as a monthly amount that you have to pay for the next 20 years. Do everything that you can to pay it off quicker. Each month, pay more into your bond than you owe. Any additional payment into your home loan will reduce the outstanding balance and the interest that you pay. As an example, paying an extra ten percent of your repayment every month on a R1 million bond can reduce the total loan by over R250 000 and the term of your bond by four years. If you have extra money, pay it into your bond. If you get an inheritance, a bonus or a big commission pay-out, put that money into your bond. A substantial one-off payment will also reduce the interest and the term of the bond. You can use the calculators at www.ooba. co.za/calculators to work out the impact that changes in the interest rates and what you repay will have on your bond. And for house hunters who are considering buying in 2014, Dyer advises the following: Save up as big a deposit as possible. This will increase your likelihood of getting bond approval and a competitive interest rate. Obviously, it also means that there will be a smaller bond to pay back. Don’t jump at the first bank to offer you a home loan. This is a 20-year commitment; so try to get the most favourable terms possible by applying to multiple banks and taking the best offer. The best way to get the best deal on your home loan is to use the services of an expert bond originator like ooba. You’ll only need to f ill out the paperwork once, and they’ll present your application to multiple banks and negotiate the best interest rate on your behalf. “Your interest rate has a massive impact on what you repay over the years,” says Dyer. “Take the time to understand how it works and do what you can to increase your repayments and reduce the term of your loan, because this will save you a lot of money in the long term.” RESOURCES ooba, RE/MAX The RIGHT Choice For Your Green Building Design SERU is an architecture, sustainability consulting and property development firm which specialises in the design of environmentally responsible buildings. Our areas of expertise are residential apartment buildings, office buildings and educational buildings. Tel: [phone] Fax: [phone] Email: [email protected] www.seru.co.za As experts in green building, we are committed to filling the gap between architecture and green buildings by embedding the principles of green buildings into all our designs to produce state of the art environmentally responsible architecture.