How to Pay Off Your Home Loan 5 Years Early (R2,000 Extra a Month) скачать в хорошем качестве

How to Pay Off Your Home Loan 5 Years Early (R2,000 Extra a Month)

Imagine finishing off your south african home loan five years early and saving R216,000 in interest! That is the opportunity I have left on the table due to what I can only call pure laziness and not sitting down to do the numbers.12 In this video, I break down the considerations you need to be making when thinking about paying off your home loan sooner. I use my own investment property as an example: The Property: A two-bedroom apartment in the north of Johannesburg, currently rented out for R9,000 Current Bond Balance: R695,936 Remaining Term: 13 years and 5 months, or 161 months, with a projected payoff date around the year 2039 Current Interest Rate: 9.65% per year, which is below the current prime lending rate of around 10.25% in South Africa. Current Monthly Payment: R7,790 I show you that if I paid an additional R2,000 every single month (making my total payment R9,790) I would save R216,000 in interest and finish paying off the loan five years earlier, around 2034. If I paid an additional R1,000 (R8,790 total), I would save R110,000 in interest and pay it off three years earlier (around 2036). Crucial Note: If you pay extra, you must stick with your initial installment (R7,790 in my case) and add the extra amount, even if the bank recalculates and reduces your minimum installment. Before you jump into paying extra, here are the three major considerations I discuss: Liquidity: If you are paying extra into an access bond account to save interest, you cannot rely on that same account for emergencies. You need to keep emergency funds somewhere else so that you have liquidity in the event of a financial shock. Reducing Flexibility: Are you willing to give up the flexibility of spending that extra R2,000 a month on other aspects of your life? If you don't have the money now, consider starting a side hustle that only needs to generate R2,000 extra per month (R500 a week) to ring-fence that money for your loan. Alternative Investment Returns: Where else could you invest that R2,000 to be guaranteed—or at least get—a return above the 9.65% interest rate you are paying on the home loan? This is a math calculation worth thinking about, for example, when deciding whether to contribute to a Tax-Free Savings Account (TFSA) to reach your R500,000 lifetime limit over the next 13 years. Remember, sometimes it's not just about the numbers; the psychological benefit of wiping away a couple of years of debt is also worth considering. Disclaimer: None of my videos constitute financial advice. If you are looking for financial advice, please speak to somebody who is certified and registered with the FSCA