ooba Home Loans’ Chief Operating Officer outlines a significant opportunity for homeowners in South Africa.
In the current economic climate, paying down your home goes a long way. And while many people think that you need to spend hundreds of thousands to do so, small monthly additions make all the difference.
Homeowners breathed a sigh of relief as the Monetary Policy Committee announced that it would keep the repo rate pinned at 8.25% and, therefore, the prime interest rate at 11.75% for the time being. “If prime returns to 10% and if you were to keep your monthly instalment at R15,461 – overpaying the minimum repayment by R1,693 – you would be able to reduce your loan term to 14.71 years,You would also reduce your total loan repayment amount by a whopping R981,015 – almost a million rand in savingsThe investment benefit of this approach becomes more apparent when applying the same approach to a 30-year loan term.
“These are a great investment in the same way as having a deposit for your home purchase is. An overpayment is an extra lump-sum repayment on your bond over and above your required minimum monthly instalment,” explained Rubin.
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