PROPERTY NEWS - Buying property isn’t just about finding the right home; it’s also about structuring your home loan in a way that aligns with your long-term financial goals.
By thinking carefully about their finance options, homeowners can save thousands of rands over the life of their loan, giving them greater financial freedom and sustained enjoyment of their home.
“Part of making sound property decisions is to manage home finances effectively — ensuring buyers get the most value out of their investment. Purchasing a home is one of the biggest financial commitments most South Africans will ever make, so it is important to make wise decisions when taking on home financing,” says regional director and CEO of REMAX Southern Africa, Adrian Goslett.
To help homeowners get the most out of their home financing, REMAX Southern Africa shares some top tips for smart property ownership:
Consider setting up an access bond
An access bond allows homeowners to deposit extra funds into their bond account and withdraw them when needed.
“This acts like a savings account with the added benefit of reducing the interest charged on your home loan,” explains Goslett. It provides flexibility while encouraging disciplined saving. The more you deposit, the less interest you pay — and you can access the surplus funds at any time if unexpected expenses arise.
It’s important to note that access bonds are not all created equal — each financial institution offers different terms and conditions for how their access bond facility works.
Some recalculate the monthly repayments automatically after each additional repayment, others keep the repayments the same – each will have different impacts on how much access you have to the extra funds.
It’s essential to do your research and compare offerings from various lenders before selecting a home loan provider.
Don’t overextend your budget
When applying for a bond, banks typically allow up to 30% of your gross income to go towards your bond repayment. While this can be a useful guiding principal, Goslett advises taking a balanced and conservative approach before accepting the highest possible loan amount.
“Just because you qualify for a bigger bond doesn’t necessarily mean you should take it. Leave room in your budget for rate increases and other costs like levies, maintenance, and insurance. It can sometimes be worthwhile to stretch yourself a bit – especially if you know that your earnings are likely to increase in the coming years.
"Just be sure you are not overextending yourself to the point where you might default on repayments,” he cautions.
Make Extra Payments – Even Small Ones Count
Any additional payments you make, whether monthly or as a lump sum, go directly toward your capital balance, shortening the loan term and reducing the total interest paid.
“Even R500 extra per month can shave years off your loan and hundreds of thousands in interest charges,” says Goslett.
Shop around for the best home loan
Shopping around for the best interest rate on your home loan can save you hundreds of thousands of rands over the life of your bond. Even a small difference in the interest rate — as little as 0.25% — can have a significant impact on your monthly repayments and the total interest paid over 20 to 30 years.
Instead of approaching each bank individually, homeowners can simplify the process by working through a bond originator.
These professionals submit your application to multiple banks on your behalf and negotiate with lenders to secure the most competitive rate, often at no additional cost to you. This not only saves time but also increases your chances of securing the most favourable loan terms available.
“Informed buyers make better long-term decisions. We encourage all clients to speak with a professional financial advisor or bond originator to explore the best home finance solutions for their unique situation. Once equipped with that knowledge, speak to a real estate professional for guidance on how to find the perfect property investment tailored for your unique circumstances,” Goslett concludes.
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