Tuesday, January 26, 2010

How do Interest Rates Affect Your Pocket?

Today, reserve bank governer, Gill Marcus, announced that the repo rate will remain unchanged at 7.00%. This means that the prime home loans rate will also remain unchanged at 10.5%

What would a cut of 0.5% mean in your pocket?

To put it in simple terms, a home loan of R500 000 at prime (10.50%) over 20 years would work out to +/-R4,948 pm (excl insurance).

If you were able to get a home loan rate of 0.50% below prime, or 10.00%, that would mean your installment would be R4,785 - a saving of R163.00

These amounts would be doubled up in the case of a R1 mil home loan.

So at the moment that home loan would cost +/- R9,897 pm, and with a 0.5% cut it would be R9,570 pm, a saving of R327.00 pm

These amounts may not seem significant, but if you take it over a year, that's a saving of R3924, and that's NOT INCLUDING INTEREST!

If you put that R327.00 back into your home loan on a monthly basis, you'll pay off your loan in 18.16 years and not 20 years.

Doesn't seem like much? Further consider this... the interest on that home loan will reduce from R1,316,051 to R1,167,953 - That's a saving of almost R150 000 over the period of the loan!

All because you put that additional R327.00 back into the bond every month.

Imagine what would happen if you made that R500?

Want more tips and tricks on how to reduce your rate on your home loan or for a refinance home loan, please don't hesitate to contact me through www.gpfmortgage.co.za/contactus.html

Wednesday, January 20, 2010

Banks Cutting out Discounts

Clients are reeling because some of the banks, namely Standard Bank as well as ABSA are not letting originators choose the attorneys that will register the bonds anymore.

The implications?

Many originators that have been in the business a long time have built up relationships with certain attorneys. What many have done was to have an agreement in place that if they referred a client to that attorney to attend to the bond registration the client would receive a substantial discount.

These discounts were even up to 50% of the attorney's fee, which ensured a big saving for the client.

For instance, on a R500 000 bond, if the the client got a 50% discount he would only have to pay the attorney +/- R3078, now, that amount doubles up to R6156.

You can further double up that amount on a R1 000 000 bond.

If the bank chooses the registration attorney, the originator has no relationship or agreement in place, which means the client loses out.

Where will this end?

Tuesday, January 12, 2010

How to Boost Your Credit score When Looking for a SA Home Loan

SA Home Loans: When looking for a home loan it is important to try to increase your credit ranking. In general, the better your credit standing, the more beneficial credit terms you'll get.

When you have had a low credit standing you'll be at the mercy of the banks who will be able to charge you interest rates way above prime.

Fix Errors On the Credit reports

The two biggest credit agencies in South Africa namely, Trans Union and Experian. So the first thing you should do is to get a free credit report and search for for errors in your record. You should act right away to get it fixed, because if you apply for any kind of SA home loans your lender isn't just going to take your word for it that there are mistakes on your credit report.

You should not Apply For Debt When Applying For SA Home Loans

Do not make the mistake of running around and applying for credit cards or car financing until after your home loan is approved. Remember that looking for new credit temporarily brings down your credit score.

Pay Your Debt That's Near The Limit

Credit balances which are over 50% of your credit limit brings down your credit score. In general, try and keep balances below 50% but for optimum benefit try to keep balances below 30% .

To put it differently, if your credit limit is R10, 000, attempt to bring the balance right down to R3, 000. This will help to boost your credit score. Your credit score will increase immediately once your balance is decreased.

For the best results one could clear your credit card debt in full each month. However, don't close your accounts, since that may lower your credit score. What’s key here is the % of your total credit which you're using. The lower it is the better.

Pay Your Accounts on Time

Please don't make late payments. Paying your bills before its due is one of the simplest ways to increase your credit standing. It shows the bank that you take your responsibilities seriously and that they can expect to be paid on time also if they grant you mortgage finance.

So, its not that impossible to give your credit rating a boost, but the biggest thing is that you have to take steps .