How much you can save by paying just R600 extra into your home loan each month

If you want a reason to stop smoking – or better still, never to start – you just need to consider the money you save could help you to pay off your bond much sooner.

This is according to Rudi Botha, CEO of BetterBond, who said that smokers should take stock of their cigarette consumption and the opportunity to rather pay an additional amount off their home loan every month.

“If the average price of a pack of 20 cigarettes is R40 and you smoke even 10 cigarettes a day, your habit is costing you R600 a month – or more than R7,200 a year,” he said.

“If you were to put that money towards your bond, it could reduce the time it takes to pay off your home by several years – and save you many thousands of rands in interest.”

At the current prime rate of 10.25%, the minimum monthly repayment to pay off a R1 million bond in 20 years is just over R9,800, said Botha, “but consumers who give up smoking and add their R600 worth of cigarette money to this minimum every month stand to pay off their homes in less than 17 years – and save more than R255,000 worth of interest,” he said.

Alternatively, Botha said money not spent on smoking could become the means by which to lower or eliminate any other debt – or to save a deposit for a first home purchase.

BetterBond statistics showed that the average age of first-time home buyers is about 35, with South Africans renting or sharing homes for much longer than before.

This is often a question of affordability more than anything else, and that can always be improved by saving for a deposit.

“For example, paying a 10% deposit on a home priced at R1 million will lower your home loan requirement to R900,000, and at an interest rate of 10.25% that will drop your minimum bond repayment by around R1,000 a month.

“This will make it considerably easier to qualify for a home loan – and increase the chance that you will be able to negotiate an interest rate concession that generates even more savings on the total cost of your home,” Botha said.

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How much you can save by paying just R600 extra into your home loan each month