select
|

Invest in your home, get excellent returns

At the start of the new financial year, many people are making plans to get better control of their finances and are reviewing their insurance, investment and savings plans.

“Everyone’s looking for the best return on their money, whether they are saving for a holiday, planning a legacy for their children or investing for retirement,” says Shaun Rademeyer, CEO of bond originator BetterLife Home Loans.

“And if you are a homeowner and have some money to save each month, one of the very best investments you can make is to pay that money into your existing home loan account to shorten the lifespan of the loan.

“The amount of interest you will save on your home loan by doing this will in most cases far outweigh the returns you could hope to make by choosing seemingly more exciting or adventurous investment avenues.”

He says the latest BetterLife statistics indicate that the average home price in SA is now R1.1 million, and that the average deposit being paid is 22% of that, leaving some R858 000 to be financed by way of a home loan.

“At the standard home loan interest rate of 10.5%, that would put the average monthly bond repayment on a 20-year loan at just under R8 600. And, thanks to the way compound interest works, homeowners who pay only this minimum amount each month will pay almost R1.2m in interest over the life of the loan – or more than the original cost of the property.

“On the other hand, homeowners who pays just 10% more than the minimum each month – or an additional R860 in the example above – will pay off the loan in 15 years and three months instead of 20 years – and save about R334 000 in interest in the process.

“That represents a return of more than 100% on the additional R158 000 invested in the home loan, and there really aren’t many other investments that can guarantee you that kind of return – and at the same time deliver a paid-for asset.”

Rademeyer says it is worth remembering that the property will also have appreciated in value while you were paying it off, meaning that you stand to make a further return on your overall investment if you sell it.

“For example, our statistics show that the average home price at the end of February this year was almost 20% higher than the average just three years ago, at the end of February 2014, while the latest FNB figures show a 297% increase in the average house price over the past 16 years.”


  Comment on this Article

  Please login to post comments

Post to my facebook wall
  
2000
Characters remaining


    Latest Property News
    • 21 Nov 2017
      As more and more South Africans look to invest in property abroad, Spain is offering them one of the best deals in global real estate.
    • 20 Nov 2017
      Since 2012, sectional title complexes have been leading the South African property market, not only in terms of price growth, but sales volumes as well. Remaining relatively strong, even in the face of 2017’s political and economic turmoil, experts say this market segment could offer valuable insight into South Africans’ property purchase priorities.
    • 20 Nov 2017
      Regardless of whether you are purchasing your first start-up home, downsizing or moving in with roommates, finding ways to maximise small spaces can be a big advantage, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.
    • 20 Nov 2017
      Property valued at approximately R1 billion is on High Street Auctions’ sales floor during the month of November, including the much-anticipated sale of the Tshwane Mayoral Residence and the land occupied by one of South Africa’s oldest operating gold mines.
    • 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.
        
    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