A sound interest rate can be beneficial
While a steady interest rate is good, we discuss why you should be looking at tightening your belt, which will help you buy that property in Mpumalanga and potentially save in the long run.
Now might be the moment you have been waiting for to purchase property in Mpumalanga. With the discussions of the MPC (Monetary Policy Committee) having a positive outcome for the population, the announcement was made that the prime lending rate would remain at 10.25% as well as the repo rate at 6.75%, although your initial reaction would be to celebrate, you might want to consider tightening your belt to better prepare for late this year, where hikes are to be expected.
Adrian Goslett, Regional Manager and CEO of RE/MAX Southern Africa advices that by adding and additional 0.25% to your monthly home loan payments, you will better ensure for the future when those potential increases are bound to take place. Better yet you can put this money into an interest bearing account, that will help you plan for the future, not to mention that you and your family will already be accustomed to living off of smaller budget.
Another useful tip from Goslett is to invest the money you would have spent if the interest rate had gone up, by reinvesting this amount straight back into your home loan you can not only shorten the repayment period on your property but also potentially save a great deal of money. For example, a property that is worth R1,500 000.00 will cost you over R3,500 000.00 with an interest rate of 10.25% over a twenty year period, making your monthly installment approximately R14,700.00.
“Putting in an extra R500 per month would shorten the repayment period by two years and save you around R200,000, which is enough to buy a slightly nicer car or put your kid through high school with some change to spare,” says Goslett.
