What a steady interest rate means for you
Are tough financial times making you want to sell your property in Durban? Perhaps now is the time to consider ways that you can benefit from the steady interest rates, and potentially pay off your property a lot quicker.
Many South Africans have been feeling the pinch in these tough financial times, and you would not be alone if you are considering selling your property in Durban. But before you make any hasty decisions, this article could provide you with some much needed insight that will enable you to hold onto your property and possibly save in the long run.
There was a positive outcome to the Monetary Policy Committee’s (MPC) discussion recently, which has ensured South Africans that the prime lending rate at 10.25% and the repo rate at 6.75% will remain as is, for now.
Although this is a cause to celebrate, you might want to reconsider. By tightening your belt now, you will not only secure a bit more finances for when the rates to go up, but you will also be used to living off of a smaller budget. By investing an extra 0.25% in an interest bearing account there will be a little emergency money set aside that could provide for some financial breathing space.
Adrian Goslett, Regional Manager and CEO of RE/MAX Southern Africa suggests that you should be reinvesting the money into your home loan that you would have spent if the rates did increase. By doing so you will not only shorten the period of your home loan repayments, but also save a lot of money. He goes on further to break it down, making this process a little less daunting.
“By means of an example, a R1,500,000 property at a 10.25% interest rate will cost you over R3,500,000 over a 20-year period of instalments. The monthly instalments would work out to be roughly R14,700.” by adding an additional payment of only R300.00 you can shorten your repayment period by 1 year and potentially save R130 000.00.
