Monthly Repayments

Question 1

How much should monthly repayments cost?

Answer 1

• should not exceed between 25% and 30% of the homeowner’s monthly income

Question 2

What do monthly instalments include?

Answer 2

• interest
• life insurance premiums
• homeowner’s comprehensive insurance premiums
• administration fees

Question 3

What are the two types of interest rates?

Answer 3

• fixed
• variable

Question 4

What does a fixed interest rate mean?

Answer 4

• if the interest rate increases, the homeowner will not have to pay a higher interest rate
• the repayments will not increase
• if the interest rate lowers, they will not pay less

Question 5

How does a fixed interest rate provide security?

Answer 5

• the homeowner cannot be affected by interest rate increases

Question 6

What does a flexible or fluctuating interest rate mean?

Answer 6

• homeowner will benefit if interest rate goes down
• if interest rates rise, payments will increase

Question 7

What happens if the interest rate increases?

Answer 7

• monthly payment on loans may become higher than expected
• more uncertainty where future interest rates are concerned

Question 8

What should consumers always budget for?

Answer 8

• repayments calculated at a higher interest than at the time the loan was approved