How to outsmart the possible effects of junk status when paying off your home loan
SANDTON – There will always be pressure on consumers’ ability to repay their debts including their home loans.
There will always be pressure on consumers’ ability to repay their debts including their Sandton home loans.
Sandton consumers can prepare themselves financially by reducing their short-term debt by increasing repayment installments to reduce their outstanding capital debt faster and by saving financially.
How to become savings conscious:
Cut your expenditure whenever and wherever you can
Stick to the necessities when grocery shopping
Drink that coffee at home or at work and not at a coffee shop
Make lunch in advance for school and work
Arrange lift clubs or use public transport
Sell everything you have not used in a year
Think about whether your hobby can generate an income
Do things with the children which does not cost money.
Pay a bigger deposit when purchasing a home
Allocate as much money as you can to your house deposit. It is more likely that banks will approve your Sandton property loan if you pay a bigger deposit than required. For instance, a R20 000 deposit on a R1 million property loan will reduce your total repayments by R41 656.
Negotiate a lower interest rate
Use an expert mortgage originator to negotiate the lowest possible interest rate. A small reduction will make a significant difference to your total repayments.
Reduce the term and repayments on your home loan
Think about the total value of your repayments over the full term of the loan not just about your monthly bond payments. Using the Homes calculator you can see that on a house bought for R1 000 000, paid off at R8 678 monthly over 20 years at an 8.5 per cent interest rate, after 20 years, the buyer will have paid the bank R2 082 776.
By paying extra money into your bond you can significantly reduce the term and cost of your Sandton home loan. Even an extra R200 a month will reduce the term of the repayments by more than a year and the total paid by R71 931. Pay some of any windfalls that come your way into your bond. Having an access bond means that you can withdraw money if you should need it. Paying extra money into your bond reduces the interest from that point on.
