Even if you have sufficient funds to buy a house, a home loan offers great benefits, as it will allow you to acquire the home at a very low cost, helping to improve your economic position.
The government subsidizes banks’ lending to private builders. Private firms sell the homes and the lenders finance the mortgages at fixed rates of interest (find more info here).
The real value of your property is the sum of its equity and the amount you pay in rent and other expenses. If you take out a home loan, you are in effect reducing the amount of money you have available for any other purpose, especially if it is a house that would bring in more cash in the form of rents and other income.
You can check your eligibility for a mortgage by visiting our Home Loans page.
If you take out a home loan, you are in effect reducing the amount of money you have available for any other purpose, especially if it is a house that would bring in more cash in the form of rents and other income. You will usually have to pay interest on the loan.
If you have money in savings you may wish to pay it back with a loan (see Mortgage for more on how to do that) if the home is likely to become a mortgage-free asset. If you are considering a mortgage, remember that you could lose your home if you do not make repayments on it.
If you want a mortgage, you should think about the interest rate and the length of the loan. We have a Mortgage Calculator that helps to work out what you will need to borrow and how much you will pay. The same is true if you are considering renting out your home.
If you have to borrow money, you will need to find a way to repay the loan quickly.
Your interest rate
The lender will set a fixed rate of interest for the amount they charge you. Usually, they will only be willing to lend to you for the interest rate they offer. If you are on a fixed rate mortgage, you can choose to borrow from a lender with a variable rate or variable rate with a fixed. You should take the lender’s minimum rate into account as a guide, when choosing a lender. Your mortgage costs The average mortgage cost depends on many factors. When you start to look at the basic costs of a mortgage, you will see that the average monthly cost of your mortgage and property tax and insurance is around 560 a month.
We make it easy to understand the finances behind your home purchase. Use the mortgage calculator to determine the cost behind buying a home.