What is a home loan and how does it work?

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MyProperty · Accepted Answer

What is a home loan?. In simple terms, a home loan is money that you borrow from a bank or financial institution to purchase a property. From the time that you secure a bond and it is registered, the home loan provider will keep your property’s title deed until your home loan is paid back in full. The home loan provider is legally entitled to keep the title deed because until you have fully repaid your home loan your home remains their property.  how does it work?. Your monthly repayments consist of a portion of the loan amount and interest on the loan. The amount of interest you pay depends on the prime interest rate, the interest rate of the home loan, and other factors such as whether you opted for the 20 or 30 year bond. The higher risk you are, the higher your home loan interest rate will be. However, there are ways to mitigate this, such as paying a larger deposit or improving your credit record, which will result in lower interest rates, saving you money in the long-term. Find out more about applying for a home loan