Anyone who has bought a home will have done some home loan research. They will have found that all mortgages that are worth your time come from banks. Each of these has a number of different options, let us look at the ABSA home loan as an example.
The first options involve the interest rate. On an ABSA home loan you can choose either a variable or a fixed interest rate. The variable interest rate is exactly that, it changes with the prime lending rate. However, it is possible to change this to a different type of interest rate at any time. The fixed interest rate remains the same for a pre-determined period of time, after which it reverts to a variable interest rate. You cannot change this before the time is up, but your repayments are not affected by a volatile prime lending rate.
The ABSA home loan also has a option called a “FastForward”. This allows you to change the installments you make each month or the interest rate. This means that you can make your home loan affordable and save yourself from a blacklisting. Mostly this is to shorten the time period of your repayment, but should also be able to be used to make the repayments a little lower so that you can get by if you hit a difficult patch financially.
This “FastForward” innovation allows you to have access to something called a “FlexiReserve”. This amounts to the funds over and above what should be repaid on the mortgage. So if you have paid more than you actually needed to, you can withdraw this money if you need it for something. This money can be used for anything that you need and is available at very short notice. However, if you do withdraw this money, it will mean that the amount repaid into your loan has decreased and you will be liable for the full amount again.
The ABSA home loan has also a further advance feature. You become eligible for this if your property has increased in value to a sufficient level so as to cover the additional amount required. This money can be used in the purchase of other things like cars and renovations. Of course renovations will further increase the value of your home and allow you access to yet more funds. Sounds good? Be careful not to overextend yourself. Whilst the mortgage interest rate is less than other interest rates, you will still have to repay the amount over a longer period of time which may cost more in the long run.
Getting a bond is the only way to buy a house for most people and having all these options and many others available makes it even more affordable for those who struggle to then get a car or to do repairs once they have already bought their home. When you are getting a home loan, take the time to compare all the banks’ options and choose the one that suits you best and has the most options you will actually use.