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Go Big or Go Home

17 Mar 2016

Listed by Home loan Junction 17/03/2016

A bond repayment calculator makes light work of trying to work out what monthly repayments will be required when taking out a bond. It certainly beats frantically scribbling down numbers and firmly thumping your calculator while your blood pressure rises!
Everyone’s dream is to own their own home, but you need to make sure that you can afford the monthly repayments before you take on such a big financial commitment. Mortgage repayments can change from time to time if the interest rate is linked to the prime rate. A financial provider is sometimes agreeable to a fixed interest rate, if this is what you favour. Terms of a home loan are flexible and range from between 20 to 30 years. As this is an extensive time period, one should carefully calculate the affordability of the loan amount you settle for.
To help home owners get the feel of the responsibility attached to taking out a loan we have a bond repayment calculator on our website. This is a tool which bond originators supply to assist a prospective homeowner like you to calculate various mortgage repayments.

Bond Affordability Calculator
A bond repayment calculator will work out the size of the bond you qualify to apply for. By visiting our website you will be able to get an idea of what bond repayments you can afford each month. There are many factors that come into play and which can affect the bond you are offered. The general idea is that the higher your salary, the larger the bond you would qualify for.
However, a person earning a large-numbered salary but having many obligations (debts) could find that they qualify for a smaller mortgage than another applicant earning considerably less but with no serious commitments. This is called the DTI ratio (Debt-To-Income) and is used to calculate how much ‘extra money’ one has after monthly expenses are accounted for. Every person has unique circumstances and requirements and we will treat each application with these distinctive factors in mind.

Bond Repayment Calculator
What portion of your salary should you spend on a bond each month? This is another situation which will rely purely on individual circumstances.
• The traditional rule of thumb consideration is mortgage repayments should be no more than 30% of your pre-tax salary. Another conservative view is that it should be not be in excess of 25% of your take home salary.
• Most banks prefer a deposit before granting a home loan as 100% loans are hard to qualify for.
• The calculator will give you an idea of what your monthly repayments could be. A different interest rate will alter your monthly payment as will the time period in which you chose to pay it.
• By paying back more than the stipulated amount, an exceptional difference in the eventual time and amount your home will cost you.
• We suggest you to play around with numbers on our bond repayment calculator and have your questions ready for us to help you answer.

The Big Picture
Sound advice is to take into account the whole of your housing obligation and not only the mortgage. Your housing budget should include your bond repayment, municipal rates and taxes and home insurance. Do not be drawn into over-extending yourself as what seems affordable today could be very uncomfortable down the line. Children grow up, educational costs increase and perhaps supporting a parent will come into the equation, not to mention maintenance and repairs.
This is a long-term commitment and it is wise to consider all factors. Research residential areas before deciding on a home that is affordable. Where is there expected growth? Will the location work for the family’s needs?
Place the purchase price, years you are planning to repay the bond in, current interest rate and your expected deposit amount into the bond repayment calculator to get the big picture on what the real monthly mortgage costs will be. Homeloan Junction has a separate calculator to help you ascertain your bond and transfer costs.

Loan - To - Value Ratio (LTV)
Giving financial assistance to home buyers is a risk for the lenders. They want to be sure that their money is repaid, with interest of course, and in the event of any unfortunate circumstances that they are not the ones to lose financially. Therefore the bond you are granted will also be linked to the property you wish to purchase: what it is valued at and what the asking price is. Being able to recover their money is an important consideration.

Smart Thinking
Being cautious does not mean doom and gloom and your dreams flying out the window. Perhaps a little trade-off is all that is needed: buy a smaller home that can accommodate renovations or alterations at a later stage. The cheapest house in the best neighborhood is an alternative view as you cannot over capitalize and all improvements will add value to your home. Do you have to buy a small home in the newest trendy area? Think about the well-established areas with older homes that have huge rooms, established gardens but need just a little tweaking to make them your dream home.
Use our online bond repayment calculator to see where you stand, and contact us for expert consultation on applying for your homeloan. You can go big on your dreams and go home with the help of Homeloan Junction.

Yours in Property


Kind Regards
Jonathan Hattingh
Property Finance Consultant

C: +27 82 662 3033 T: +27 16 454 0016 F: +27 86 558 2592 E: jonathan@hljunction.co.za
www.homeloanjunction.co.za