THE NEWS NO ONE IS TALKING ABOUT

There was good news, and it went by largely unnoticed. An interest rate decrease normally hogs the headlines, but it moved over to make room for other news. Very few economists predicted it would happen, but happen it did…and it’s a good sign. Of course, it’s great because your bond repayment decreased, but it’s also good because it signals a different trend. Albeit slowly, the home loan interest rate has been rising, and this decrease is a changing trend – downwards. In among all the dire news, fact is, we haven’t had a decrease in some time!

What does this mean for you? If you’re a seller, it builds confidence for buyers in the marketplace, and that always translates into more properties selling, and selling faster…but only if you’re not overpricing your property. If you’re a buyer, not only is your bond repayment less, but you might even be eligible for a higher home loan.

What are the smart homeowners doing with that extra cash? They’re continuing to pay exactly the same bond repayment as they were paying before the decrease. Here’s why.

You have a one million rand home loan. You would normally pay 240 months of instalments, but if you continue to pay what you were prior to this decrease, you’ll pay for 227 months instead - you’ll pay off your home loan 13 months earlier than you would have. Impressively, you’ll save in interest an amount of around R130 000 over the duration of the repayment period.

On that million rand home loan, your monthly repayment has come down from R10 152,29 to R 9 983,80.
 

If you have expensive debt which needs servicing – credit or store cards – you may choose not to keep your monthly bond repayments the same, and rather pay that amount towards reducing that debt.

Whatever you do, one way or another, use the money to reduce debt. None of us can see into the future of home loan rates, but do consider this news as both good and a fresh, welcome trend. When the going is good, get your house in order.