{"id":170109,"date":"2017-04-12T16:32:49","date_gmt":"2017-04-12T14:32:49","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=170109"},"modified":"2017-04-12T16:32:49","modified_gmt":"2017-04-12T14:32:49","slug":"how-much-money-you-save-by-paying-off-your-home-loan-early","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/wealth\/170109\/how-much-money-you-save-by-paying-off-your-home-loan-early\/","title":{"rendered":"How much money you save by paying off your home loan early"},"content":{"rendered":"

Many South Africans are making plans to get better control of their finances amid the political noise and the decision by two major ratings firms to downgrade the country to non-investment grade, or junk status.<\/span>
\n<\/span><\/p>\n

As a result, people are looking for the best return on their money, whether they are saving for a holiday, planning a legacy for their children or investing for retirement. <\/span><\/p>\n

According to Shaun Rademeyer, CEO at\u00a0bond originator, BetterLife Home Loans, paying money into your existing home loan account to shorten the lifespan of the loan each month is one of the better investment choices.
\n<\/span><\/p>\n

“The reason is that the amount of interest you will save on your home loan by doing this will in most cases far outweigh the returns you could hope to make by choosing seemingly more exciting or adventurous investment avenues.”<\/p>\n

BetterLife statistics indicate that the average home price in South Africa is now R1.1 million, while the average deposit being paid is 22% of that, leaving some R858,000 to be financed by way of a home loan.<\/p>\n

\u201cAt the standard home loan interest rate of 10.5%, that would put the average monthly bond repayment on a 20-year loan at just under R8,600. And, thanks to the way compound interest works, the homeowner who pays only this minimum amount each month will pay almost R1.2 million in interest over the life of the loan \u2013 or more than the original cost of the property.”<\/p>\n

On the other hand, the homeowner who pays just 10% more than the minimum each month \u2013 or an additional R860 in the example above – will pay off the loan in 15 years<\/span> and three months instead of 20 years \u2013 and save some R334,000 worth of interest in the process.<\/p>\n

\u201cThat represents a return of more than 100% on the additional R158,000 invested in the home loan, and there really aren\u2019t many other investments that can guarantee you that kind of return – and at the same time deliver a fully-paid-for property,” Rademeyer said.<\/p>\n

Also noteworthy, is that the property itself will also have appreciated in value while the owner was paying it off, meaning better overall returns.<\/p>\n

“Our statistics show that the average home price at the end of February this year was almost 20% higher than the average just three years ago, at the end of February 2014, while the latest FNB figures show a 297% increase in the average house price over the past 16 years,” said Rademeyer.<\/p>\n

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Read: Finally, some good news for home buyers in South Africa<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Many South Africans are making plans to get better control of their finances amid the political noise and the decision by two major ratings firms to downgrade the country to junk status.<\/p>\n","protected":false},"author":10,"featured_media":170161,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9880],"tags":[11497,26],"class_list":["post-170109","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-wealth","tag-betterlife-home-loans","tag-headline"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/170109","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=170109"}],"version-history":[{"count":3,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/170109\/revisions"}],"predecessor-version":[{"id":170185,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/170109\/revisions\/170185"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/170161"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=170109"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=170109"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=170109"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}