Beware of Hidden Home Loans Costs

By Zulika van Heerden

Home Loans: At some point or another we all, except a fortunate few, need a home loan to be able to purchase a property.

In addition to the monthly installments there are also other costs you need to be aware of. What are these costs?

There are at least 4 additional costs to keep in mind after you purchase a property:

1 - Rates and taxes (utilities)

These are calculated on a monthly basis and varies according to your use of water and sewrage facilities, it also includes refuse removal and the largest portion is calculated according to the size of your plot.

2 - Home Owners Insurance

This is an insurance that covers you if there are damages to your property caused by storms or other natural disasters. The bank or lender will always suggest you use their insurer, but you don't have to because these are often quite a bit more expensive than outside insurers, so be aware and shop around.

3 - Monthly bank fees

The bank or lender that has granted your home loan will also charge you a monthly fee to manage the account. The maximum they may charge according to the National Credit Act is R57.00. This fee will vary from bank to bank and will also be less, depending on the bank, if you use their insurer or more expensive if you use an outside insurer. However, the amount may never be more than R57.00.

4 - Life Insurance/Home Loan Cover

Life insurance or home loan cover is mandatory at most banks, so that in the event of the death of the breadwinner or spouse that both the bank and the remaining familiy members are protected. The bank is protected in that the entire bond is paid off (provided the life cover is sufficient) and your family benefit too because they won't be burdened with a monthly bond repayment.

These are the 4 major home loans costs that you'll encounter after purchasing a home - remember that when purchasing a sectional title property all the above costs, except for 1 and 2 are normally included in your levy, therefore you needn't worry about those.

For more information on home loans or other eye-opening articles please visit our website on: http://www.gpfmortgage.co.za/