4 year-end tips for home owners to consider
There’s no question that South African home owners have been under financial strain over the last few years. While it may be tempting to loosen the purse strings as the festive season approaches, a different approach would be far more rewarding and is the best gift you could give yourself. Below are 4 year-end tips for home owners.
- Use your bonus or 13th cheque in December to help pay your home loan. Long-term debt, like home loans and mortgages, benefit greatly from any extra money you can put in. So why not use some of your extra money to reduce your debt? Home loans are probably the single biggest debt the average person will incur, and it stretches over decades. A few hundred rand a month extra paid into your home loan can bring down the interest and the term of the loan significantly. This will help you save money in the long term. You also end up with less of a financial strain at the end of every month.
‘The December period is a good time to start putting in place a financial plan for the next year. With a little bit of planning, you can enjoy rewarding yourself as well as saving, so that you enter the New Year with less financial pressure,’ says Steven Barker, head of home loans at Standard Bank.
- Have fun, but plan ahead. The challenge of the summer holidays is that most people get paid earlier than usual in December – this makes managing your money until the end of January a little tricky. It’s important to realise that your month-end payment commitments for December are still there. January is also traditionally a month with more expenses than most other months, due to school fees, stationary and uniforms. Plan ahead and put some additional money aside; this will not only assist you with the added January expenses, but will help to ease the financial pressure from your festive season spend.
READ MORE: A YEAR TO IMPROVE YOUR FINANCES
- Make your bond work for you. Consider increasing your home loan payments in the New Year if your salary increases. This will pay major dividends. The pre-payment amount can be as small as an additional R50 per month, or up to the total outstanding amount, should a customer have the funds to make the payment.READ MORE: 5 TIPS TO SAVE MONEY DURING TOUGH FINANCIAL TIMES
- Fixing your interest rate could help you save. It’s worthwhile for home owners or prospective home buyers to look at interest rates in general and the options available, as this could help save them some money. Fixing an interest rate on a home loan means that the interest rate charged will remain fixed for the fixed rate duration, no matter what market interest rates do. Whether a rate is fixed or variable, the best option ultimately depends on an individual’s preference. This is a good option for customers to better structure their cash flow and protect against future rate hikes. The downside, of course, is that customers could get committed to a higher rate.