Taking a proactive approach to understanding the benefits of paying off bonds sooner rather than later will help to save money and increase wealth.
This is according to Standard Bank head of home loans Steven Barker.
Barker provided the following four pieces of advice for when buying a home:
- Know what you can afford in terms of monthly bond instalments and expenses.
Barker said: “This will help you determine if you can afford the payments and the costs associated with owning a home, such as water and electricity, rates and taxes, maintenance, insurance or other unforeseeable expenses that can arise.”
- Ensure you have a couple of hundred rand more to spare.
“If the monthly repayments are more than what you have budgeted for, then the price of the property is beyond your means. Look for a home within a lower price range to avoid finding yourself in a position where you don’t have money left after paying your bond or spare money to save,” added Barker.
- Avoid taking a home loan that matches the maximum you have allowed in your budget for repayment.
Having additional cash in your budget means that, should circumstances allow, you could pay a few hundred rand more over and above your minimum monthly instalments which, again, translates into paying your bond off over a shorter term, paying less in interest, and affording you more time to save for retirement.
- Never underestimate the value of a deposit.
Saving for a deposit before you actually make a home purchase will not only lessen the loan amount but will give you practice on the discipline needed to save or pay off this loan amount a lot faster.
– Caxton News Service