When you buy a home, you know that you are making the most important financial investment of your life through the commitment of a home loan. What’s less obvious is that responsible management of your bond can help you achieve other personal financial goals.
According to our experts, there is a clever way you can get your home loan working for you: the key is having excess balances that have built up in your home loan account, and having an Access Bond.
An Access Bond will allow you to take out surplus funds in your home loan account whenever needed. Even if you have no immediate need to access your cash, just having this facility means that money is always available in case of an emergency. If you decide not to use the available money, your bond will be paid off sooner, so you’ll find yourself in a win-win situation no matter what you choose.
For example: If a bond is for R1 000 000 over a term of 20 years at a rate of 10.5% interest, and a deposit of R100 000 has been paid, repayments would be R8 985.42 a month. By adding an extra R500 per month, the repayment period would reduce to just less than 17 years, and R221 475.08 would be saved in interest costs.
Most people spend a lifetime paying off a home, so it makes sense to use your home loan as a tool that can facilitate and enhance your personal financial plan.
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