SA mortgage management tips that will save you thousands – #2

In the first part of this home loan management series we explained that the first step to saving thousands on your home loan repayment is to pay off your HIGH INTEREST debts first.

You may need to increase your existing mortgage to consolidate these debts into one low interest bond account.

Once you’ve identified and eliminated other debts you can begin to put a little extra into your bond account every month.

Tip #2: Increase your monthly bond installments slightly

Even if it is as little as R100 extra a month, the more you pay into your bond, the sooner it can be settled. A bond of R450 000, at 12% over 20 years, requires a minimum repayment of R4 954 per month.

By paying R100 more per month, you can effectively reduce the interest you pay by R66 800 (assuming the interest and capital remain the same) and reduce the 20 years by about 15 months.

The cumulative effect of such a small amount every month can cut your bond term by 5 years and you’ll end up pay more than R60 000 less for your home.

Increasing your bond installment slightly clearly has a huge effect on your homeloan but when you combine these tips with some others that we’ll discuss in the rest of this series you’ll begin to increase your savings to Hundreds of thousands.

Tip #1: Eliminate all Short-Term debts
Tip #3: Pay lump sums and bonuses into your bond
Tip #4: Don’t lower your home loan repayments when rates drop

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