Buyers Info - Types of Home Loans / Mortgage Bonds in South Africa

Types of home loans
The banks normally offer the following type of home loans. One of our dudes will help you choose the one that best suites your needs and will help you try and keep the paperwork to the minimun. (yippee)

Variable Rate Home Loan

This is the most popular one. The interest rate is linked to the base home loan rate, which moves up and down (fortunately more down recently). If the base rate decreases by one percent, (we have a party) so will your interest rate and unfortunately it works the other way as well. So if the base rate goes up, so does your home loan rate.

Fixed Rate Home Loan

The home loan interest is fixed for a specific period, normally around one or two years. The fixed interest rate is just about always higher than the base home rate. The fixed rate protects you from increasing rates and gives you the peace of mind in knowing exactly what your payment will be. The down side you will not benefit from any decreases in the interest rate.

Capped Rate Home Loan

Very seldom available and if available the qualifying criteria are very onerous (so maybe Bill Gates will get it). With this one you benefit from decreases and have a maximum rate built in. Oh well, its good to dream.

Reducing or Step Down Home Loan

The home loan interest is guaranteed to decrease by a small amount every six months for an agreed period. This gradual reduction applies regardless of wether the home loan interest rate rises or falls.

First Time Homeowners Loan

Becoming extremely popular (whoopee) amongst the cash strapped victims of society. Basically you will be able to lend more than 100% of the purchase price, to include transfer and registration costs (and maybe even a case of beer)