If you are holding back on purchasing property in Limpopo, then now would be the time to strike while the iron is hot. After a positive outcome of the MPC’s discussion (Monetary Policy Committee) they have confirmed that the prime lending rate will remain at 10.25% as well as the repo rate at 6.75%. This good news will give some much needed relief to many financially stressed South Africans.
Let’s take a look at how this will most benefit you. By ensuring that you tighten your belt while the interest rates are steady, you can not only afford to put a little extra away in an interest bearing account that will act as emergency money and aid in some financial relief should the need arise. But you will also already be accustomed to living off of a smaller budget, making it easier for you and your family when the interest rate goes up.
Some good advice from Adrian Goslett, Regional Manager and CEO of RE/MAX Southern Africa is to reinvest the money that you would have spent into your home loan as if the interest rates had gone up. He explains that by adding just 0.25% to your monthly home loan payments you can not only shorten the repayment period of your home loan, but make a massive saving in the end.
If you look at a property that costs R1,500,000.00 with an interest rate of 10.25%, you will pay over a twenty year period R3,500,000.00. Making your monthly installment roughly R14,700.00, by adding just R300.00 to your payment you can shorten the payment period by up to a year, and save a massive R130,000.00. “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.
