Tips for making the most of unchanged interest rate

At the start of 2019 there has been plenty of positive talk after a gruelling 2018, but if property in Glenvista is part of your planning for the year ahead, then you may want to soak up as much knowledge as possible. The Private Property website offers regular updates on all matters related to the property market, and in a recent post, they looked at the interest rate.

South Africans had to deal with a slight increase last year, but there were minor celebrations at the start of 2019 when it was revealed that the Reserve Bank Monetary Policy Committee had decided not to increase the repo rate again. This means that it will remain at 6.75% for now, with the prime lending rate at 10.25%.

However, before you break out the balloons and start spending that saved cash in your mind, it is best to take a breath and consider what your options are now, and how you can maximise this opportunity. Experts in the industry warn that although there was no increase now, it does not mean that there won’t be changes in the future.

For this reason, they recommend taking that 0.25% of your home loan instalment and dumping it into a savings account. This way, if there are changes ahead, you will have the funds to ease the stress, and if not, you have a small kitty to make use of in an emergency.

Another option would be to pay that extra amount directly into your home loan, as this can assist in shortening the length of your loan repayments. Regional Director and CEO of RE/MAX of Southern Africa, Adrian Goslett, used an example of a property worth R1.5m to illustrate the saving potential.

“By putting in just an extra R300 per month towards your bond, the repayment period would be shortened by over a year, saving you R130,000 – enough to buy an entry-level car. Putting in an extra R500 per month would shorten the repayment period by two years and save you around R200,000,” he said.