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
    • 25 Jun 2018
      The completion this month of the R100-million bridge linking Val de Vie Estate with the R45 Simondium Road will widen the appeal of this luxury estate, says Pam Golding Properties. Potential buyers who want to enjoy the benefits of living at Val de Vie even though they work in Stellenbosch will be delighted to know that the new bridge will reduce travel time from Paarl to less than 20 minutes. It should also take no more than half an hour to drive to the V&A Waterfront.
    • 25 Jun 2018
      Selling your house can be both frightening and exciting, especially if you do not know where to start when staging your home. There is one room in particular, however, that potential buyers scrutinise like no other: the kitchen.
    • 25 Jun 2018
      The mid-year break is upon us and, whether you’ve planned for it or not, your children are going to be at home for the next three weeks. Why not take a few days leave and enjoy a mini staycation with them? Those without children can call it a well-deserved mid-year pitstop.
    • 22 Jun 2018
      The rental market in many Johannesburg suburbs has shown encouraging signs of revival this year but it remains a competitive market and landlords who best cater to their market’s needs will reap the healthiest returns.
    • 22 Jun 2018
      Home design is constantly evolving to reflect the changing needs of society. We look at some of the ways in which our use of space is changing.
    • 22 Jun 2018
      While estate agents can help the seller with correctly pricing the property and marketing a property to the right pool of potential buyers, at the end of the day it’s the impression that the property will make on buyers that counts the most.
    • 21 Jun 2018
      Anyone who’s ever been involved in a building project that’s gone wrong will appreciate the importance of adequate insurance cover in the construction industry.
    • 21 Jun 2018
      A recent news story about a blind tenant caught in a legal battle with his body corporate over letters and notices he was unable to read and consequently comply with has raised the question: what are the legal obligations for landlords with disabled tenants?
        
    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