A home loan is one which enables a person to make an investment that can be the major investment in his whole life. Despite what Polonius had to say on the subject when he advised, 'neither a borrower nor a lender be', a home loan is likely to benefit both parties.
The advantage to the borrower lies in leverage. By obtaining a large loan he is able to benefit from an escalation in the value of his home proportionately. Leverage is also available on other investments such as foreign exchange and shares but in such cases an investor stands to lose as much as he gains, and possibly everything.
Owning a home fulfills a very important emotional need. As Shakespeare noted even the wren, the most diminutive of birds, will fight for her nest against an owl. Even if the home is owned mainly by a bank the fact that a place may be called home makes people feel much more secure and able to devote themselves to higher needs.
A young married person should make a home of his own one his most important investment choices. In most cases that will mean applying for a bond. One of the country's major banks will be the most likely source of the necessary capital amount. However, there are also organizations known as bond originators which can facilitate an online application and obtain the best terms from one of the banks.
A cash amount of between eight and ten percent of the purchase price of the property will be necessary as a starting point. At certain times, when property prices are buoyant, loans of one hundred percent may be available. Experienced people advise against this in most cases because mortgage repayments can become so onerous that a buyer can found himself in severe difficulties.
It is best to pay in as much as one can afford and aim to have the property unencumbered or only slightly encumbered as soon as possible. In any event mortgage repayments should not exceed thirty percent of a borrower's monthly income. Ideally one should hardly notice the monthly bond repayments that should resemble a reasonable monthly rent payment.
A home loan may be repaid over varying time periods. Although a time span of twenty years will yield a comfortable stream of interest to the lender over a long period, it also means that the borrower will eventually pay a very large amount for the property that he bought for a perhaps nominal amount. Those in the know will possible advise a borrower to repay the loan as soon as he possibly can.
The advantage to the borrower lies in leverage. By obtaining a large loan he is able to benefit from an escalation in the value of his home proportionately. Leverage is also available on other investments such as foreign exchange and shares but in such cases an investor stands to lose as much as he gains, and possibly everything.
Owning a home fulfills a very important emotional need. As Shakespeare noted even the wren, the most diminutive of birds, will fight for her nest against an owl. Even if the home is owned mainly by a bank the fact that a place may be called home makes people feel much more secure and able to devote themselves to higher needs.
A young married person should make a home of his own one his most important investment choices. In most cases that will mean applying for a bond. One of the country's major banks will be the most likely source of the necessary capital amount. However, there are also organizations known as bond originators which can facilitate an online application and obtain the best terms from one of the banks.
A cash amount of between eight and ten percent of the purchase price of the property will be necessary as a starting point. At certain times, when property prices are buoyant, loans of one hundred percent may be available. Experienced people advise against this in most cases because mortgage repayments can become so onerous that a buyer can found himself in severe difficulties.
It is best to pay in as much as one can afford and aim to have the property unencumbered or only slightly encumbered as soon as possible. In any event mortgage repayments should not exceed thirty percent of a borrower's monthly income. Ideally one should hardly notice the monthly bond repayments that should resemble a reasonable monthly rent payment.
A home loan may be repaid over varying time periods. Although a time span of twenty years will yield a comfortable stream of interest to the lender over a long period, it also means that the borrower will eventually pay a very large amount for the property that he bought for a perhaps nominal amount. Those in the know will possible advise a borrower to repay the loan as soon as he possibly can.
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