For most people, buying a house is going to be their biggest financial investment, and despite this we often give little serious thought to the fact we’ll be committed to paying a bond for the next 20 or 30 years.
Another reason for this common oversight is that the large commitment is often looked at in terms of its relatively small monthly repayments.
But you would be shocked, if you were to realize just how much interest you’ll end up paying on that bond over the term of your long.
For example, on a bond of R1 000 000 over 20 years you actually end up paying the bank over R2 million. That’s double the initial loan amount – meaning you’re paying R1 million in interest payments alone!
Over a 30 year term the total interest paid shoots up to over R1.7 million. It’s crazy!
But – there are a few ways you can reduce those interest repayments.
Below we have listed a few ways to reduce your home loan balance quicker, starting with the easiest ideas to implement.
Make Earlier Payments
Simply paying your bond installment 1 day earlier will cut down the interest charges.
Pay A Little Extra Every Month
Start building up the rewarding habit of paying extra into you bond account. Even R50/pm is a start.
Pay Lump-sums into your Bond
If you have an access bond, don’t put your 13th cheque or bonus into your savings account.
You’ll be a better investment by keeping it in your bond account until you need to use those funds.
Lower Your Interest Rate
Lowing your interest rate will have a huge and dramatic effect on your total bond repayments.
Put down a bigger deposit
Finally, it helps to put down a bigger deposit. That way you’ll need a smaller bond, that has far less interest charges.