What a difference R100 can make to your mortgage bond

What can you buy for R100 today? Maybe a loaf of bread, a packet of sugar, a sachet of milk, some chicken pieces, a 2.5kg packet of maize meal, a 2kg packet of rice, some tomatoes, some onions, half a dozen eggs, and it’s gone.  And this is enough for only one or two people.

But that R100 can do wonders on your bond. Say you your bond is for R300 000. If you add just R100 a month to your normal repayment, this will reduce your repayment period from 20 years to 18 years and two months and you will save about R37 700 at the current rate of interest of 9 percent.

For a R800 000 bond, an extra R100 a month will reduce your bond payment period by nine months and you will save just over R40 000. On a R1.2 million bond, you will reduce the repayment period by six months and save about R42 000.

These were the average prices of small, medium and large houses, four to five years ago.  A small house is 80-140m2, a medium house 141-220m2 and a large house 221-400m2.

According to the latest ABSA bank housing prices index, the average price of the small house was R833 100 in June. The medium-sized house averaged R1.1 million while the large house stood at R1.8million.

The rand is declining against the United States dollar and will exceed R11inthe next few months. Interest rates will also go up. When interest rates go up, this is means your monthly repayment goes up.

But it you add that R100 onto to the new repayment, you make higher savings. On the R300 000 if interest went up to 9.5 percent, R100 would reduce your repayment period by 23 months and you would save R41 000.

If the interest rate went up to 10 percent and you continued to pay R100 extra, this would still reduce your repayment period by 23 months but you would save R45 000 in interest charges.

You get the gist. If you have a bond or are intending to buy a house, please do something now because higher interests rates will make most houses unaffordable. Higher interests rates mean higher monthly repayments, and higher repayments mean you have to earn more.

My book: How to buy a house for half the price, explains everything from how much bond you qualify for on your present salary to options on how to save without stretching your budget. It is available from Amazon as an eBook for instant download or Kalahari as a hard copy.

Do you know that in a 20-year bond, you pay off your principal loan in 9 years?

When most people get their first bond, they are so excited about the easy repayment terms that they forget that they have to pay the same amount every month for 20 years, making a total of 240 months.

But more importantly they do not realise that in those 20 years they will pay more than double the bond they obtain.

Some might even experience hard times like when they lose their jobs and end up losing their homes when they fail to repay their bonds.

What most people are not aware of is that if you lose your house after nine years, you have practically paid off your principal loan. But you still owe the bank the interest.

Yes, that’s a fact. In a 20-year bond, your interest alone is the equivalent of years’ repayments.

But you can save thousands and even millions by simply paying a little extra each month, without even stretching your budget.

That little extra can save your home from repossession when you fall into hard times as it can act as an advance payment, but more importantly it will allow you to pay off your bond in a much shorter period saving up to half the interest if you maintain the payments.

It is really that simple and our book: How to buy a house for half the price shows you these easy steps and how you can really pay half the total amount that you were required to pay.

This is what Phindile Kunene, editor of the COSATU magazine, Shop Steward, said in her review the book:  "How to buy a house for half the price is a must read for all South Africans, especially those who fall outside the state low cost housing subsidy net. It is an important and timely book given the demand for housing amongst young black South Africans who either resort to buying homes through finance capital or to renting town house complexes in the country's suburbs.

"This book is an empowering tool for those currently facing the might of finance capital. It can teach you how to play the game to your benefit; how to beat the banks at their own game and how to maximise the gains out of a situation that is not designed to favour you. This alone, makes the book a good read."

The book is available from Amazon as a kindle book which you can download onto your computer or smartphone or as a hard copy from Kalahari.

Did you know that more black South African women own homes than men?

Surprise! Surprise! South Africa’s black women own more houses than their male counterparts according to the latest General Household Survey by Statistics South Africa. And they are the only racial group who beat their male folks. Coloured, Asian and white women are all beaten hands down

Stats SA says some 3.6 million black women owned homes that were fully paid-up last year while only 3.4 million black men owned fully paid-up homes. Blacks owned 7 million of the 8.3 million homes that were paid-up in South Africa.

Women in other races trailed way behind their men. Among Coloureds, 221 000 women owned fully-paid homes against 273 000 men. The gap for Asians, including Indians, was even wider. Only 53 000 woken owned fully-paid homes compared to 108 000 men. Whites fared worst with only 201 000 women owning fully-paid up homes, less than half of the 437 000 men.

But men who owned homes but were still paying for them outnumbered women across all racial groups.

Black men more than doubled their female counterparts with 339 000 men against 140 000 women. For Coloureds it was 134 000 men against 42 000 women, and 55 000 Asian men against 12 000 women. The gap for whites was even wider with 341 000 men against 77 000 women.

*If you are buying a house or intend to buy one, our book gives you advice on how to quickly pay off your house and still pay half the price. It is available as a kindle book from Amazon and a printed version from Kalahari.

Is the number of South Africans living in their own homes declining?

The general household survey conducted by Statistics South Africa which was released this month shows that the number of South Africans living in their own homes which they have fully paid for has declined from a peak of 61.4 percent in 2008 to 54.9 percent last year.

The figures do not show whether people are losing their homes or whether there has been an increase in the number of households with most not owning their homes.

The survey says in 2002, only 52.9 percent of South African lived in their own fully-paid homes. This figure increased peaking at 61.4 percent in 2008 but declined to 53.5 percent in 2011 before increasing again to 54.5 percent in 2012 and 54.9 percent last year.

The survey showed that there were 15.1 million households in South Africa last year and 8.3 million owned homes that were fully paid for. Some 3.2 million were renting, while 1.9 million were living in rent free homes. Another 1.4 million owned their homes but were still paying for them.

While the majority of South African households are living in homes that have been fully paid for, figures from the National Credit Regulator show that there are 20.64 million credit-active consumers and just over half are in good standing.

The latest figures are for December last year and they show that only 10.71 million consumers were in good standing. A staggering 9.93 million had impaired records with 2.6 million having judgments and administration orders pending.

SA consumers to be hard pressed

South African consumers are likely to continue experiencing financial strain in the wake of a poorly performing economy, low employment and real income growth, one of the country’s leading banks ABSA says in its latest Housing Price Indices report.

The economy contracted by 0.6 percent in the first quarter. Barclays, the parent company of ABSA,  says growth for this year will only be 1.4 percent. The Reserve Bank says it will be 2 percent.

For those who can raise the cash, this is the ideal time to buy property because the housing market has been stable with average price growth of between 8 and 9 percent during the past nine months.

But upward pressure on inflation and an expected further hike in interest rates will affect consumers’ spending power and impact credit accessibility, affordability and demand.

Average prices for homes in May were:

• Small homes (80m²-140m²): R837 200
• Medium-sized homes (141m²-220 m²): R1 146 800
• Large homes (221m²-400m²): R1 780 200

 Consumer price inflation averaged 6% year-on-year in the first four months of the year, and is forecast to remain above this level for the rest of the year.

Interest rates are expected to be hiked by another 50 basis points in September, which will bring prime lending and variable mortgage interest rates to a level of 9.5% per annum by year-end.

*Our book offers valuable advice on how to save on your bond and is available here for instant download to your computer or smartphone.