Costly household errors and how to avoid them

Given that the average house price in SA is closing in on R800 000 and that most people take out a hefty bond to buy their home, it’s startling that many of us are wasting money on household expenses through simple oversights.

Rhys Dyer, Executive Director of MortgageSA, South Africa’s leading mortgage originator, says that nearly everyone can make considerable savings if they follow some simple rules.

“Here are 5 of the most common mistakes homeowners make with their household expenses and tips on how to avoid them.”

Not reviewing your bond

If you haven’t re-looked at your bond for 5 years, then you are probably paying too much. Over time, rising property prices reduces the loan to value ratio, therefore lowering the risk to the bank as the value of the asset they’re financing has increased.

And if you are earning more that when you took out the original bond you may also be able to renegotiate a lower interest rate. Both these factors make the banks likely to look favourably on offering you a lower bond rate, leading to a considerable saving over time.

Under-insuring your home and contents

If you’ve made any improvements since taking out your home insurance, it will have changed the value of your home. Significant changes to your house will increase the value it should be insured for, so it’s important to keep you insurer up to date with any changes.

And don’t forget your contents insurance. Unfortunately, most people underestimate how much their belongings are worth. If you purchase new furniture or electronics, then you should review your contents policy to make sure you have adequate cover.

Using a sub-standard contractor

Botched home improvements cost consumers millions every year and can actually reduce the value of your home, or worse, cause expensive damage. And unfortunately, finding a builder or a tradesperson and managing a building or renovation project are probably the most stress-inducing aspects of any homeowner. Do a thorough background check on anyone who is going to take a hammer to your home.

Spending on improvements that add little value to your home

Not every improvement will add value to your home. New carpets could cost R50 000 but add very little value to its overall worth. However, the right paint job can add up to 10% to your home’s value.

Your first home improvement priority should be to ensure the property is structurally sound. Roofing, windows, damp proofing and the electrics should all be in top condition and, if they’re not, should be at the top of your home improvements list.

Once you’ve taken care of the structural side of things, you can move onto improving the look and feel of your home. Have a chat with some local estate agents to get their advice about what features can add the most value to your home.

Failing to take basic steps to secure your home

It’s all very good and well to have a home contents insurance policy, but if you don’t take the appropriate measures to secure your property, you may find yourself seriously out of pocket if you are burgled.

If your home fails to meet your insurer’s security requirements, then your policy will become void, even if you’ve paid premiums for years. Don’t waste your insurance premiums or, worse, face having to pay to replace stolen possessions. Read your contents policy carefully and make sure your home meets its minimum security requirements.

You can even get a discount on some policies – sometimes up to 10% - by fitting burglar alarms or locks above the minimum required standard. Joining a neighbourhood watch scheme can also reduce your insurance premium.
Loading comments
More news articles
Guidelines to securing a home loan
29 May 2018
Many young South Africans are working hard to achieve their dream of purchasing their first home. However, the process can be challenging due to the daunting application process, which can take up to 2 years and is often enough to discourage prospective buyers.
read more
Things you should consider before upgrading to a new home
23 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.
read more