It is not uncommon for people to hope for a home of their own. But, with inflation sky-high and the population on the rise, homeownership is no small feat.
So, do you just give up on your dream to ever own a home?
No, there is certainly no need for such extreme measures because we now have the option of home loans. And, mortgages really do make life easy for people to finally own their homes.
Is it really a good idea to take a loan for your home?
It may sound daunting to take up a loan and pay monthly premiums for the next few years to come, but it is actually a good idea.
Firstly, you don’t have to pay rent anymore. And, the monthly premiums that you have to pay actually lead up to ownership of a property. Whereas, in a rented property all the rent that you pay doesn’t add up to make an asset in the end.
It may sound astounding to you but interest rates for home loans are quite favorable. You may choose a fixed interest rate to pay on the home loan, but it has happened that people pay less in interest rates on home loans than other loans.
Nothing is more certain than taxes, but taking up a home loan for your very first house results in a tax deduction. This, in itself, is a very good reason to feel relieved.
Appreciation of Asset
It is a common phenomenon that property prices have increased over the years all across the globe. Hence, taking up a home loan results not only in building an asset portfolio but also in significant appreciation of assets.
Sense of Accomplishment
There is no greater sense of satisfaction than to finally have your own house. Even, if the road to ownership is through a home loan, it is certainly worth the hard work.
So, does everyone end up with the same kind of home loan?
Quite the contrary, there are several home loan plans.
First-time buyers home loan: This is for people who cannot afford to pay a large deposit when buying property. Hence, the loan includes the price of the property, registration and transfer costs.
Fixed-rate home loan: Here, the borrower can get a fixed interest rate to escape the inflation rate. As a rule, fixed interest rates are higher than the base home interest rate, but if the interest rates go higher than you won’t end up paying more.
Variable home loan: The variable home loan works on the principle of interest rates being aligned to base-home interest rates.
Capped-rate home loan: If you don’t want to go for the fixed or variable home loan, then the capped-rate home loan is for you. The period for loan payment has a fixed interest rate for a period of time and then the variable home loan plan applies.
So, the question really is, what are you waiting for?
Your dream to own a home of your own isn’t really so far from reality. It may take some time and some clever thinking as well as looking for the right home loan plans but it can most certainly be done.
The best place to start would be on the internet, to research property prices, the best locations as well as compare home loan quotes for South Africa.