Can Personal Loans in South Africa Be Used as Affordable Home Loans?July 25, 2019
Many people are looking to either buy a new house or renovate their homes for various reasons. This may include refurbishing damage caused by flooding, fire, or any other disaster – that, or you simply feel it’s time to pack up your bags and start a new life.
In that regard, many homebuyers find it challenging to make even the first down payment on a house, which simply emphasizes how you need the right type of loan for you to successfully build your dream home from the ground up. On that note, it’s important to consider your financing options such as home loans and personal loans to assist you in such a large decision.
What are Personal Loans?
The great thing about personal loans is that it is a viable option for a variety of purposes. Generally, it is an unsecured loan that is great for quick solutions for emergencies, home improvements, or leisure activities like weddings and holidays.
The price can range between R1,000 to R200,000, which you can pay off within 72 months through monthly instalments. In that regard, many people are fond of the prospect of personal loans due to its flexibility as well as ease of its application process. The requirements are also not as strict compared to any other loans available, which allows multiple people from various backgrounds and purposes to acquire one.
What are Home Loans?
In essence, a home loan is given by a provider wherein the home or property being purchased is used as a form of collateral in cases where you cannot make the loan repayments. This means that the lender will keep your property’s title until the home loan is paid back in full, and providers are legally entitled to withhold the title deed as a form of security.
The most important factor in home loans is knowing the precise amount you need to borrow, as well as the repayment terms. This includes understanding the interest rates as well as for settling for a repayment process set in a certain period, which generally falls between 20 to 30 years. To qualify for a home loan, you must take note of the following:
- Income and Job Stability
- Additional Income
- Credit History
- Other Debts
- The Size of Deposit You Can Afford
Take note that home loans will not be approved if repayments are more than 3-% of your gross monthly income.
Which is Right For You: Personal Loans or Home Loans?
Personal loans are typically unsecured loans and will need to be repaid in full within a short period of 72 months. Because personal loans don’t require collateral, in case of failed payments, the loan tends to offer higher interest rates. Not to mention, there is a limit of the amount you can borrow from personal loans, meaning that some homeowners may need to shell out from their pocket or seek another home loan to construct their dream home.
Meanwhile, a home loan offers a large sum that is more than enough to cover the costs of the house, as well as offers a lower interest rate due to the house serving as collateral in case of due payments.
Furthermore, it offers a long period to pay off, allowing homeowners more time and room to breathe when paying off debts. In that regard, the answer seems to be obvious now: home loans is a clear-cut winner and is safer, reliable, and cost-effective way of financing your dream home.
If you’re looking to take out a personal loan in South Africa, Hoopla Loans is your best option. Get in touch with us today to see how we can help.