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 Sep 2017
      Gazetted in March 2017 for comment, the long-awaited Property Practitioners Bill is intended to repeal the Estate Agency Affairs Act 112 of 1976 and transform the entire property market.
    • 21 Sep 2017
      Cape Town’s Southern Suburbs’ superior housing market performance of recent years has been largely been due to ongoing interest from foreign buyers and high demand from semigrants who are strongly attracted to suburbs such as Upper Claremont that offer the best feeder locations to the area’s top schools and are close to first-class amenities such as Cavendish Square.
    • 21 Sep 2017
      Did you know that inefficient, badly fitting windows can heat up your house by a whopping 75% in summer – and account for a third of total heat loss during winter?
    • 21 Sep 2017
      The paperwork involved in the sale of a property is a potential minefield for both buyer and seller, and should not be tackled without the assistance of an experienced estate agent and a conveyancing attorney.
    • 20 Sep 2017
      There is a very specific buyer for Heritage homes - not your usual buyer looking for a modern, contemporary home, but someone who likes the look, feel and even the particular scent of an older home steeped in history and with a tangible sense of history and heritage. Much like a well-matured wine, in fact, says Pam Mullany, an agent for Pam Golding Properties.
    • 20 Sep 2017
      In spite of the increasingly subdued economy and slackening real estate market, the Rondebosch sectional title sector demonstrated its resilience when a 250m² three-bedroom apartment realised a record sale price of R6.2 million at the end of July, beating the previous 2014 high of R5.6m achieved in the same complex.
    • 20 Sep 2017
      Participate in a research project about consumers’ willingness to purchase real estate online, conducted by the University of Stellenbosch Business School, MyProperty and Entegral.
    • 20 Sep 2017
      Broker/Owner of RE/MAX Living in Cape Town’s City Bowl and Atlantic, Gerlinde Moser, is the definition of success. She the first real estate professional within Southern Africa to be awarded the Luminary of Distinction, the highest distinction of three career awards given by RE/MAX International. In fact, she is only one of two people outside of North America and Canada to receive the award.
        
    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