Today, there are hundreds, if not thousands of home loan products on the market and most of the time it can be difficult to decide which one is right for your personal financial situation.
One of the key features of a home loan is the interest rate. Interest is a payment made by you to a lender as an incentive for them to lend to you. Therefore, an interest rate is a percentage of the loan. A high interest rate means that you would have large repayments, whereas a low interest rate would mean that your repayments would be more affordable.
For example, James has a home loan of $300,000 with an interest rate of 5% which he plans to pay off in the next 30 years. His monthly repayment would be $1,611 not including any additional fees charged by his lender. If his interest rate was 6%, he would have to pay $1,799 per month – that’s an additional $188 per month just for a 1% difference for his interest rate.
The concept of interest and interest rates can be traced back to the early days of finance. In simple agricultural societies, money did not exist. Bartering was the main form of trade. People borrowed seeds from a lender and once these seeds were cultivated and harvested, the lender expected a certain percentage of the crop. Records from ancient Greece, Egypt, and Mesopotamia show a similar story.
In these ancient civilizations interest rates were incredibly high. Interest rates during the Persian Conquests soared to upwards of 40%! In comparison. Mesopotamia was reasonable, charging 20%.
In the modern day, home loan interest rates are quite a lot lower than what they used to be. Urban Home Loans is committed to finding you a low interest rate loan with as small a repayment as possible. We receive exclusive discounts and packages with a variety of lenders, making sure that you receive a home loan tailored to your individual needs.
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