Knowing the amount of the monthly payment or the interest rate is not enough. The main component of the cost is interest, which is basically compensation paid to the lender for granting the loan and depends in part on the mortgage term. In addition to interest there are other costs which you need to take into account. When budgeting your expenses, you should also take into account notary fees and one-off taxes to be paid when you sign the property purchase agreement.
Be sure to get information about potential home loans from several lenders and find out all of the costs involved with a loan.
We suggest that you access our database of fees and tariffs for loans and advances before you start shopping around. The bank which best suits your purposes might not be the cheapest – in terms of its fees and charges.
When comparing loans, make sure you are reviewing the same information in each loan such as: loan amount, type of loan, duration of the loan, monthly payment, penalties, annual percentage rate of charge (APRC) and other important features. Comparing the APRC can give you a clear picture of the different payments each loan requires. This is because the APRC takes into account not only the interest rate but also fees (also of a legal dimension), and certain other credit charges that you may be required to pay, expressed as a yearly rate. This will tell you the cost of what you are borrowing and will allow you to compare the costs of one loan to another. Make sure that your loan agreements are put in writing and never accept verbal promises as agreements.
Further information about home and personal loans is available here.