select
|

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
  
2000
Characters remaining


    Latest Property News
    • 25 Apr 2018
      Whether you are a seasoned seller or new to the game, putting your home on the market is an exciting moment. To ensure you get the best possible outcome these 8 value adding additions to your home is worth the effort.
    • 25 Apr 2018
      After four years of unprecedented growth fuelled by semigration, the Southern suburbs market faced a number of challenges in 2017, including dwindling affordability and a marked slowing in house price growth with many sellers forced to lower their prices in order to secure a sale.
    • 25 Apr 2018
      Mall of Africa, is celebrating its second year of sensational success. This splendid super-regional shopping centre first opened on 28 April 2016, and has grown in popularity, performance and profile since then.
    • 25 Apr 2018
      While the role of trustee in a sectional title scheme is a voluntary and unpaid position, it is one that comes with huge responsibility. Trustees have a fiduciary duty towards their scheme, says Chinelle Hewit, Operations Manager at sectional title finance company Propell.
    • 24 Apr 2018
      The thing about the property ladder is that at some point in our lives we all have reason to want to climb a rung or two higher. Sometimes, it’s because we’ve outgrown our previous dream home, or because we want to be in a better neighbourhood that’s closer to work or to schools. Sometimes it’s because our circumstances have changed, and we’re taking care of elderly parents or relatives. Sometimes, it’s just because we want a property that reflects the financial status our hard work has won.
    • 20 Apr 2018
      Whenever changes in the political ecosystem of a traditional property market create uncertainty, smart investors begin to look elsewhere for new opportunities. Property experts at IP Global have analysed the trends and crunched the numbers to find new markets to explore in Europe and the United States.
    • 20 Apr 2018
      Energy and water self-sufficiency are increasingly important factors in home buyers’ choice of property – especially in Cape Town where the extreme drought of the past few years has made municipal supply costly as well as uncertain.
    • 19 Apr 2018
      During the last decade, rampant development has progressively transformed Cape Town’s property landscape with densification being the order of the day, but there are still one or two hidden gems like Scarborough which have retained their original character, offering an inimitable lifestyle and an attractive investment opportunity.
        
    X
    Subscribe to the MyProperty Newsletter

    Name  
    Last Name  
    Email Address  
    Email Frequency
    select
    X
    Share this Page

       
    For Sale Property
    Rental Property
    More Options
    About
    Connect with us
    FEEDBACK