Re­duce your loan in­stead of fix­ing rate

Business Day - Home Front - - HOMEFRONT -

PAY MORE Home­own­ers would do bet­ter to in­crease their monthly home loan in­stal­ment now than to fix the in­ter­est rate on that loan. That’s the un­equiv­o­cal view of Har­courts Africa CEO Richard Gray, who says that with oil and food prices ris­ing and in­fla­tion pres­sure build­ing up there is a lot of ex­pec­ta­tion at the mo­ment that in­ter­est rates will start ris­ing again quite soon. “And nat­u­rally this makes bor­row­ers won­der whether they should try to fix the in­ter­est rate on their home loans while the go­ing is good. How­ever, it’s re­ally im­por­tant to note that you can’t just fix the rate at the cur­rent level. Banks will usu­ally charge a pre­mium of at least one or two per­cent­age points to fix a rate for 12 months or more, and

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