Making your Home Loan work for you

A home is a serious investment and, like all investments, it needs to be managed properly in order to ensure that you get the best possible return. But few people, once they’ve had their home loan registered and start repaying the loan, give their most important investment another moments thought. Yet there are a number of important steps that a homeowner can take to ensure that their hard-earned money is being put to good use:

Increase your home loan repayment:

When you borrow money “Home Loan” to purchase a home you are in effect taking out two loans. The first loan is to repay the capital amount (known as the principal sum) and the second loan is to repay the interest charged over the period of the loan. The majority of the money you repay in the first years of having a home loan goes towards paying back this interest, which will only marginally reduce the principal sum.

In South Africa, interest is generally calculated daily on your mortgage. In effect, this means that the amount you owe the bank increases every day. Because of the nature of compound interest, regular additional repayments made at the beginning of your loan term will have a much greater effect on the cost of your home loan than if you start paying extra cash into your home loan account five or ten years down the line. However, even if you are already a number of years into your loan term, you can still make a considerable saving by paying additional money into your home loan. By increasing your monthly instalments, you’ll reduce the term of your home loan, which means that you won’t be paying heavy home loan instalments in later years. The result is that you will have paid less money in interest over the term of the home loan.

There are a number of easy ways that you can put additional money into your home loan without really feeling the difference in your pocket:

• Put the additional income you receive from your annual salary increase into your home loan
• When interest rates decrease contact your lender “ Banks Home Loan Department” and ask them to maintain the instalment that you were paying prior to the drop on lending rates
• Put a portion of your annual bonus into your home loan, you may put extra money into your home loan anytime you want to. Every little bit helps. Making a prepayment ‘ Home Loan Deposit’ when the loan registers is particularly helpful, as you will reduce the capital amount immediately, significantly reducing the total interest payable over the term of the loan.

Use your home loan as an interest – bearing savings account:

Banks are in business to make profit so it makes sense that they charge a higher interest rate to people borrowing money from them than they do to investors who deposit funds with them. For example you might be receiving 2% interest on a positive balance for money in your savings account, but are probably being charged a much higher rate for the money you’ve borrowed to pay off your home loan.

By depositing your savings into your home loan, you are in effect receiving the interest rate that the bank charges you on your loan as positive interest on the money you invest For example, if you have a home loan for R1 million, and you deposit an extra R100 000 into your home loan, you are now no longer being charged interest on R1 million, but rather on R900 000. The money you save in interest over the time that you keep the R100 000 in your home loan is the positive interest you are in effect receiving on the money you’ve deposited. Plus you can withdraw this cash when you need it without being penalised ‘Banks Terms and Conditions Applies’

For further information contact Morne Prinsloo on 011 327 4489 or email morne@mortgagepluscc.co.za

If you would like to know more about your home loan services and mortgage requirements please phone the Mortgage Plus Head Office on:

Attached please find the Home Loan Application Form * - Short Home Loan Application Form

0861.11.11.93

info@mortgagepluscc.co.za

www.mortgagepluscc.co.za

BUYING COMMERCIAL PROPERTY

Buying commercial property means buying space or a building that will be used specifically for business purposes. Considering the money you could earn from either renting out or using the property for your own business, buying commercial property can be a worthwhile investment. Here are a few tips to consider when buying commercial real estate.

Take Your Time

You should never rush into buying commercial property. This is a process that should be considered with great care. Do you know exactly what you are looking for? Do you want an empty building or one with tenants? Is the area suitable for what you plan to do on the property? How is competition (regarding your business) in this area? Is it in a part of town where your services will be needed? Make sure you know exactly what you are looking for and whom you want to target before deciding what commercial property to buy.

Financial Planning

Once you have decided what kind of commercial property you are looking for, you need to think about finances. You will probably need a long-term loan for this new investment, so take the time to discuss your various options with Mortgage Plus “mortgage broker”.

Make sure that you get pre-approved before starting to ‘shop’ for commercial property, so that you know exactly what you can afford and what you shouldn’t bother looking at.

Find A Suitable Real Estate Agent

When you are pre-approved, the next thing for you to do is find a realtor who is an expert in commercial property. Be very clear on what you are looking for, as this will help the estate agent to find the perfect place you are looking for. If the agent does not have a clear idea of what you want, it might waste a lot of time running around looking at places you are not interested in.

Business Partners Properties

Business Partners Properties owns, manages and develops properties throughout South Africa and offer rentals that are normally at market related levels for the areas where the properties are situated

Khula Enterprise Finance

The dti (Department of Trade and Industry) recognises that support in the form of advice from specialist organisations is vital and the offer support groups to SME businesses. One such arm is Khula Enterprise Finance which is a wholesale finance institution that has well-developed ties in the public and private sectors. Through these channels – which include commercial banks, retail financial institutions, specialist funds and joint ventures, they play an effective role in order to bridge finance gaps that are not addressed by commercial financial institutions in the small business sector.

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