Getting the best out of your home loans in difficult times means examining all options

In this time of rising interest rates many consumers are reaching for their calculators to work out just what the increase will cost them. Although the increase applies to all loans, most people will be thinking about their homes and just what could happen if rates continue to rise this year. 

To make it through uncertain economic times when demands on personal finances never seem to let up, means finding ways of reducing the impact of interest rate increases on the family, says Steven Barker, Head of Home Loans at Standard Bank. 

“Surviving rate increases means looking at all available options.  The solution could be as simple as budgeting more effectively, or looking to other solutions such as fixing interest rates if this service is offered by your financial institution. The path you choose will depend on individual circumstances and requirements.”

Things to consider are:

·         Finding out exactly what the rate increase will mean to your monthly bond payment.  Once you know how much more you will be paying, you can select an appropriate approach.

·         Thinking about the possibility of more increases occurring and taking steps to cope.

“Once these two issues have been considered, turn towards your household budget and identify where you can make savings.  It is often the small things that can make a difference and a minor sacrifice can make that interest rate increase manageable,” says Mr. Barker.

He advises:

·         Keep a record of everything that is spent over a month. Examining your expenses critically will reveal where money can be saved.  Reducing spending on ‘non-essentials’ and even sacrificing that daily cup of coffee can make a huge difference – especially when you cost these items out over 12 months.  For example, you can save about R 5 000 a year just by not buying a coffee at work every day.

·         Seeing if your budget savings can enable you to pay more than required into your bond.  This will deliver short-term and long-term benefits.  In most cases it will insulate you from further rate increases, as what you manage to pay in could exceed a new rate increase.  In the long-term, and depending on the size of the increased contribution, you can shave many years off your repayment period and save thousands on interest payments.

·         Allocating a portion of any extra income, or an annual bonus payment, to your bond.  This can shield you from interest rate increases and be a great investment in your future.

“South Africans have for many years benefitted from rates that have been consistent and fairly low.  While this is not the case at the moment, and although it is difficult to predict just how high rates will go, what is certain is that as the economy improves, so the possibility of rates decreasing is enhanced – and that means more money in your pocket,” says Mr. Barker.

  Comment on this Article

  Please login to post comments

Post to my facebook wall
Characters remaining

    Latest Property News
    • 17 Nov 2017
      FWJK has announced the launch of its latest residential brand, the Lil’ Apple, which will be launched simultaneously in two developments in Cape Town and Umhlanga totaling 600 apartments. The Lil’ Apple is set to be a brand of FWJK’s New York style apartments which will be rolled out nationally.
    • 17 Nov 2017
      It’s been a tumultuous year on many fronts, with socio-political uncertainty setting the tone for much of South Africa’s economic activity yet despite this and seemingly counter-intuitively, the residential property market has held up well.
    • 17 Nov 2017
      The EAAB (the Estate Agency Affairs Board) recently claimed that around 50,000 illegal estate agents could currently be operating illegally.
    • 16 Nov 2017
      Penthouses are synonymous with New York – characterised by high-rise living that is decidedly luxurious and spacious. While exclusivity comes at a price, you can still create a “penthouse” look and feel in your existing apartment or even the upstairs bedroom of a double storey house with some clever design changes and styling touches.
    • 16 Nov 2017
      The area has long been popular with kite surfers and, with escalating property prices in Cape Town itself, is increasingly in demand with home owners who work in town, but are looking to invest in more affordable properties.
    • 16 Nov 2017
      Cape Town’s popularity as a world-class tourist destination has resulted in a spike in the number of homes available for holiday lets and fuelled investor demand for sectional title units with short term rental potential.
    • 15 Nov 2017
      Sappi, one of South Africa’s oldest global companies and a leading global supplier of sustainable woodfibre products, has moved its global and regional headquarters to a new site on the corner of Oxford and 14th Avenue in Rosebank.
    • 15 Nov 2017
      There’s an old saying in real estate that you should seek to make a profit when you buy, not only when you sell – and a large part of succeeding at that endeavour is buying a home in an area with desirable features that will enhance the resale value of your property.
    Subscribe to the MyProperty Newsletter

    Last Name  
    Email Address  
    Email Frequency
    Share this Page

    For Sale Property
    Rental Property
    More Options
    Connect with us