|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.