Using the home loan repayment calculator to save on interest

When you make the decision to buy a new home, you are going to be excited and eager to jump into
your dream home. But wait. If you are like most South Africans, you probably don’t think about
things like the current interest rate daily. You need to know how the rate set by the Reserve Bank
will affect how much you are going to have to pay on your new home.

One way to help you do this is to use a mortgage calculator. This tool allows you to input all the variable that is involved with buying a home such as the interest rate, the purchase price of the house, and how much you make in a month. It will give you the expected payments you would have to make.

There are various way you can use the calculator. It all depends on what you want to know. If you know how much you have available to spend, you put in that monthly payment, the interest rate, and repayment terms such as 15 years or 30 years, and it will tell you the maximum home price that you can afford. That is useful in narrowing down your search. If you can only afford up to a R100 000 home, you can save time not looking at homes that cost more than that.

Or you may have your sights on a home that you are not sure you can afford. In this case, you would punch in the price of the home, the interest rate, and you would try different amounts in the repayment terms variable. For example, you may not be able to buy the home with a 15-year mortgage, but it may be possible to get it at 30 years. You would end up paying more in interest over the extra fifteen years, but it could mean the difference of whether you can buy that house or not. If that was your dream home or a home that has been in the family for years, but your grandmother can no longer afford it, you may find the extra interest you would pay more than worth the
investment.

Further, if you know the home you want and the income you can expect to make over the next several years, but you want to rate for the interest rate to be perfect for the amount you want to spend, you can input the total cost, the number of years you want to pay, and your income and the home loan repayment calculator can tell you what the interest rate would have to be to meet those goals. That way you can get yourself prepared, and when the time comes that the Reserve Bank lowers the interest rate to the necessary level, you can jump on your opportunity.

All in all, you want to be as prepared as possible before making a major financial decision such as buying a home and learning to use a valuable tool like the home loan repayment calculator can save you much hassle and much money in the process.

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