A Home Loan Repayment Calculator is a handy tool for determining affordability when looking to purchase a home.
Buying a home is a procedure that usually involves a complex system of processes. One of the most important steps in this procedure involves determining affordability. It’s important to note that banks’ lending criteria often change in line with fluctuating market conditions. As a potential home owner, it’s important to consider a number of factors which may affect the banks’ decision to lend to you.
Using a Home Loan Repayment Calculator enables you to accurately work out whether you will be able to afford home loan repayments or not. Some calculators are very thorough and may prompt you to itemise your monthly expenses. They require you to indicate how much you’re actually spending each month.
A typical Home Loan Repayment Calculator prompts you to fill in these details:
- Purchase Amount
- Interest rate
- Deposit Amount
- Number of Years
- Additional Payment
Based on this information, it then calculates how much you will be expected to repay for the duration of the loan term. These figures serve as an estimation of how much you can expect to repay on a monthly basis. It’s important to consider the fluctuations in the interest rate and that they have a huge impact on your repayments. The Home Loan Repayment Calculator tool gives you a guideline as to how close you are to fulfilling your goal of becoming a home owner. Numerous banks like Absa and lending institutions such as SA Home Loans have a Home Loan Repayment Calculator on their websites.
By putting down a large deposit, this effectively allows the bank to reduce its risk and your interest rate.
You also need to make provisions for the cost associated with buying property, such as transfer duty, bond initiation, bond registration fees, pro rata municipal rates and occupational rent.
You also need to consider the fact that some municipalities may ask for between four and six months’ rates upfront. In addition, you may be required to pay for a rates clearance certificate.