Don’t overload your home loan

It may be tempting to consolidate household debt by utilizing a refinancing option on one’s home loan, but homeowners need to be careful that they are not jumping out of the frying pan and into the fire by placing too heavy a burden on their repayments.

This warning comes from Morne Prinsloo, MD of Mortgage Plus, who adds that overloaded monthly bond repayments could result in the bondholder losing his most important asset at the end of the day through foreclosure by the bank in the event that he fails to meet his installments.

“Banks do offer convenient ways of refinancing other household debt, particularly as home loan mortgage rates are generally lower than overdraft or credit card rates at the moment,” says Prinsloo.

“But consumers need to be careful that they are not pushing up their loan repayments to unmanageable levels by doing this.”

Prinsloo adds that consumers also need to be aware of the costs associated with applying for further home loan facilities. These could include property assessment fees and bond registration costs. “Consumers should ensure that these costs do not nullify the benefits of the lower interest rate saving,” he cautions.

“Consumers also need to be careful not to finance certain items over the full 20 year period of the loan. For example, the repayments on a car only last for a maximum of five years so the consumer needs to ensure that he pays this money back into his home loan account within the same period of time by increasing his monthly repayments accordingly.”

Please contact us if you require any further information or would like to apply for finance:

Complete this short form online

011.327.4489 / 0861 1111 93

morne@mortgagepluscc.co.za

www.mortgagepluscc.co.za

First time buyers

Well done! The decision to buy a home has proven to be one of the best made for millions of happy homeowners. It is a fact that property is a good investment, especially when you compare it to paying rent. It is important, however to enter the property market with a good understanding of how a property purchase works, what your costs will be and a respect that this is probably one of the largest financial commitments you will ever make.

Best advice

Your Mortgage Plus consultant will give you the best advice on all aspects of your home purchase, and most importantly on financing it, particularly when the banks differ in their approach to lending. We will help you understand the different interest rates, fees and charges, and terms and conditions available. We will explain to you the features of the different loans and why they are more suited to your individual requirements.

Important Pointers

• Know what you can afford and the costs
• Consolidate your finances
• Significant savings are possible by consolidating all your finances. As home loan rates are significantly lower than those for personal loans, overdrafts and credit cards, but significantly higher than savings and current account rates, it makes sense to consolidate everything into your home loan account.

Minimise your Mortgage
By effectively structuring your finances, you can significantly reduce your total home loan debt. Arranging part of your salary to be credited directly to the loan and making additional repayments on an ad hoc basis (like when you get a bonus) will have very beneficial results. By sticking to a workable monthly budget and avoiding unnecessary debt, you can repay your loan much more quickly and save vast amounts of interest. To find out how much interest you can save and how many years you can take off your loan, contact us today.

Example

You can settle your home loan in 5 years:

• Pay off an extra 1.2% of the original capital debt each month (R 1 200 per R 100 000)
• Adjust for interest rate changes when they occur
• Don’t access funds already paid off

Whilst this may mean some sacrifices, you will save a fortune in interest.

To qualify:

• Deposit of anything from 0 % – 30%
• First time home buyers only
• Have a clean credit record.
• Minimum loan amount of R 100 000
• Single or joint income must be minimum R 6 000 a month
• Your monthly bond repayments cannot exceed 30% of your gross monthly income. Also refer the National Credit Act stipulations.
• Permanent employment

You can take advantage of the option provided by certain banks of a 3-month holiday on home loan repayments.

Please contact us if you require any further information or would like to apply for finance:

Complete this short form online

011.327.4489 / 0861 1111 93

morne@mortgagepluscc.co.za

www.mortgagepluscc.co.za