Home Loan Tips

Home Loan Tip 1: How to pay off your home loan

If you are looking at ways to have more cash flow and are investing in your future, the first
step in the right direction is to pay off your credit cards, pay off any home loans faster and find other ways to become debt-free in the near future.

There are ways and means of paying off your home loan. For example, if the interest rates drop and you are paying less on your home loan every month, keep the payments at the higher figure and don’t drop the payments even by a couple of hundred rand as this will soon reap the rewards.

But there are other ways to pay off your home loan:

  • If you are lucky enough to get an annual or Christmas bonus, or come into a lump sum of money, instead of blowing it on something fun, why not do something sensible and put the entire amount into your home loan?
  • Did you know that you need not take out your home owner’s insurance with the financial institution where you have your bond? You can elect your own home owner’s insurance cover through a private broker or another insurance house – just shop around to find the one that makes the most financial sense and has the most comprehensive cover at a lower cost. You can save as much as 30% per annum by changing your house owner’s insurance.
  • Refinance to a 15-year home loan term if you are able to afford this option – it is not uncommon for bond holders to sign for a bond of 30 year term.
  • Remember that the shorter-term loan has a lower interest rate.
  • It’s pretty common for people to initially sign a 30-year mortgage.
  • Wherever possible, make extra payments to your home loan.
  • Did you know that if you are able to pay a little more than your loan requires, and when you make extra payments against the principal balance of your home loan, you end up decreasing that balance at an accelerated amount.
  • Your municipal rates and taxes is determined on the municipal value of your home – if you are unhappy with the valuation allocated, you are in your right to dispute this.
  • Suffice to say, if your home was valued when property prices were elevated but the value has dropped quite substantially, then you need to have your rates and taxes reassessed for this reason as your rates and taxes need to be adjusted accordingly.
  • If your property taxes are lowered after the assessment, you should continue to make the same monthly payment, assisting in helping you pay down that loan much faster.

For more information on home loans contact us today to find out how you can refinance your home loan to a shorter term or how best to pay your loan off faster; we can advise you on ways to pay off your home loan at an accelerated rate.