Home Loan Charges and Repayments

Wednesday, March 14, 2018

Home Loan Charges.

Your bank is a business which, while providing you with finance to purchase a home, also needs to generate an income to cover its overheads and be a profitable institution. This is why you pay bank charges on, for example your current account or savings account. The same applies to your home loan account.

Approximate 2016/17 home loan fees.

• Administration/ Service Fee
  This monthly fee covers letters, statements and other documents that are sent you, as required by law, as well as the cost of servicing the transactions on your home loan account. It is a fee for the general administering of your home loan, and will be included in your monthly installment. This fee remains the same irrespective of the outstanding balance, and will only cease when the bond is cancelled.You can expect to pay anywhere between R40.00 and R60.00 Monthly Fees, depending on whether you have taken out the bank's in-house homeowners insurance - this is for a Natural Person. For Juristic Entities this amount is approximately R200.00 per month.

  The service Fee will be a lesser amount if you make use of the bank's insurance.

• Initiation Fee
  You will pay this once off fee to cover the cost of the initial processing of the home loan.Some banks work on a base fee + a percentage of the loan amount, other banks charge a flat rate, but the maximum initiation fee charged will not be more than R5700.00 (Incl. VAT) - this is for a Natural Person. For Juristic Entities this amount is approximately R10 900.00.

  It will be in your best interest to budget for this amount.

Home Loan Repayments.

A Debit Order is the most convenient (and safest) way of repaying your mortgage loan. Your repayment includes:

• The capital repayment amount, which reduces your outstanding home loan balance.
• The interest due for that month on the outstanding balance.
• The homeowner's insurance premium.
• The life assurance premium, if applicable.
• The monthly administration fee.
• Less your monthly housing subsidy amount, if applicable.