In the low interest rate environment South Africans have enjoyed in the last few years, paying extra money into your bond may not have been quite as high a priority as it was when interest rates touched on 25% in the past. However, with the recent interest rate increases, and more that could follow sharing a few tips on how to save thousands on your bond.
The simple maxim ‘pay more, save more still applies, even at todays low interest rates. Paying just R100 more on a homeloan shortens the 20 year period by several years and saves you thousands of rands in total. When interest rates drop, keep your repayments at the same level to which you have become accustomed. That way you accelerate your payments and save, without impacting your current budget. These extra deposits into your homeloan, whether monthly or lump sum, also yield interest savings tax free.
Internet banking is a must for serious property owners. “Get connected” . This allows you immediate access to your funds and you can move spare cash into your homeloan account for short periods of time. You will be amazed how much you save in the long-term. Your cheque account is not for savings but only for transactions and banks enjoy ‘lazy money that just lies there! Move this money into your homeloan account where it can work for you.
Be sure, however, to check your homeloan providers policy on cash handling fees, which can be expensive. Find out if your bank charges cash handling fees on cash deposits into your bond. If not, deposit cash into the bond and, when needed, transfer the cash back into your current account overnight using the Internet.
Another money saving tip is to stay liquid. Put extra money into the bond as fast as you can, but always retain access to it. Set up your access facility when you negotiate the bond or renegotiate your bond to have this facility included.
Always pay by debit order. In addition to the convenience, you also avoid fees for late payments. There could also be other benefits, for example, First National Bank offers you eBucks for paying by debit order.
Also, be proactive in managing your homeloan. Contact your homeloan provider and renegotiate the rate you are paying. Find out what about the new homeloan products and services the homeloan provider offers that could make a positive experience to your home ownership.
In the exciting property market in South Africa, it is highly recommended that homeowners get an expert on their side. Use a bond originator to help you structure the best deal for unique requirements and look for a professional origination company with a banking background who understand the intricacies of the banks homeloan policies and procedures.