5 ways to save thousands on your South African Home Loan repayments and pay it off quicker
For most South Africans Home Loans are often the biggest financial commitment they’ll ever have, but it doesn’t have to restrict your lifestyle.
You’re about to find out how to get your Mortgage to work for you, and how you can save yourself thousands.
#1 Monitor Interest Rates:
As a homeowner you should be consistently monitoring interest rate movements. Only about 5% of all bond are fixed, which means most South African Home Loans are exposed to the benefits and dangers of variable rates.
If the Reserve Bank is about to announce a huge interest rate hike it could be better to fix your home loan rate for a short period. Another alternative is to Transfer your Home Loan to another Mortgage Lender or Bank for a lower rate this way if the Prime Rate is increased you’re monthly bond repayments remain the same.
#2 Pay More Save More:
The interest charged on South African home loans is determined by the outstanding bond amount. This means that the more your pay into your mortgage the less interest you’ll be charged over the term on your bond. The average size of a South African home loan is about R300 000 and if you have an interest rate of 11% on this bond over 20 years you’ll end up paying a total of R743 000. If you paid an extra R100 a month into your home loan account you’ll save more than R50 000 over the 20 years and if you paid an extra R400 every month you’ll save more than half the initial bond. That’s a saving of R151 500!
#3 Consolidate Debt:
South African Home loans are usually granted at a variable rate which is at least 1% below the current prime interest rate. Personal loans are usually granted that rates which are higher than prime. Therefore it makes more sense to consolidate your debts using the available funds in your bond and payoff those high interest personal loans and credit cards.
#4 Access Bonds:
Access bonds offers homeowners the flexibility of withdrawing extra funds from their bonds. This is facility becomes very useful if you need funds to purchase a new vehicle or to renovate your home.
#5 Bond Originators:
SA Bond originators have completely changed the way most South Africans apply of home loan finance. Bond Originators offer you a single point of contact when submitting your bond application. The bond consultant will collect all the necessary details and documents and then submit you application to the major banks. You originator also has the ability to negotiate with the various banks for an even lower interest rate on your bond. Most bond originators will also offer you a discount on your Bond Costs.
Contact Mortgage Innovations – PropertyLoans now to speak to a home loan consultant about applying for a new loan and how to save thousands on your existing loan.
I like the way you have simply explained what in most bank documents is ususally hidden in the fine print.
My question: Is it a wise thing to take money from the access bond and buy a car cash? Is it not advisable to have a paid-up home than a paid-up car? Please advise.
Lastly, if I own a home under a “sectional title” am I not supposed to have the Title Deed “copy” with me?
That’s very interesting, makes complete sense tho. Scary to see how easy it is to save half a million rand, well relatively easy, just for a couple hundred extra a month. Thanks for an informative article!
Hi,
Thanks for the article…
Just a couple of questions I have:
#1 – Should this not be done by the mortage origination companies themselves? Surely this is why we pay them to do the work for us? Also how easy is it just to quicly change your bond from a FIXED to VARIABLE or visa versa?
#2 Becase what you’re actually doing here is paying off your interest portion of the bond, correct?
#3 Most people get less than prime? IS that really true? How do they work out what percentage less prime you’re going to be receiving?
#4 Agreed 100%
#5 Nice – Refer to question 1…
Good article and thanks for the reading
Wizard Man