Business Day - Home Front

Reduce your loan instead of fixing rate

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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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