Real Estate Investor Magazine South Africa October/ November 2019

Scenario 1 – INTEREST RATE 10% (save each month) Home Loan amount Home Loan term Interest rate Total savings R1 million 20 years 10% R166 per month Scenario 2 – INTEREST RATE 10% (reduce repayment period) Home Loan amount Home Loan term Interest rate Extra Monthly payment Repayment period Total savings R1 million 20 years 10% R166 Reduced by 6 months R38 771 Scenario 3 – INTEREST RATE 10% (reduce repayment period) Home Loan amount Home Loan term Interest rate Monthly repayment Repayment period Total savings R600 000 20 years 10% R5889 Reduced by 6 months R23 128 Instead of using this opportunity to try and pay less on your home loan, de Waal says you should continue to pay the same and reap the rewards. “It’s best to continue paying what you were paying. And where possible, pay a little extra on top of that amount, such as when you get a performance or end-of- year bonus,” says de Waal. Scenario 1 – INTEREST RATE 10.25% Salary per month Home loan term Interest rate Home loan amount R20 000 20 years 10.25% R 611 219 Scenario 2 – INTEREST RATE 10% Salary per month Home loan term Interest rate Home loan amount R20 000 20 years 10.25% R621 747 Scenario 1 – INTEREST RATE 10.25% Salary per month Home loan term Interest rate Home loan amount R35 000 20 years 10.25% R1 069 634 Scenario 2 – INTEREST RATE 10% Salary per month Home loan term Interest rate Home loan amount R35 000 20 years 10% R 1 088 058 Previously, a 20–year home loan of R600 000 at a payment calculated on 10.25% interest, the monthly repayment would have been R5 889 per month. Now on an interest rate of 10% over the same repayment period, the monthly repayment is R5 790. Saving R99 per month. An extra monthly payment of R99 per month, with a remaining repayment period of 15 years of the 20-year home loan (as an example) will reduce the repayment period by six months and save the property owner R23 128 in total. For a mortgage of R1 million, the savings per month will be R166 per month. On a home loan of R1 million, an extra monthly payment of R166 per month, with a remaining repayment period of 15 years of the 20-year home loan will reduce the repayment period by six months and save the property owner R38 771 in total. The reduction in the interest rate will mean more buying power for the homebuyer. If you earn R20 000 per month, with an interest rate of 10.25% and calculated over a 20-year term, you may qualify for a home loan of R611 219. At an interest rate of 10%, the same income ought to raise a home loan of R621 747, thus R13 528 more ‘buying power’. An income of R35 000 per month with a 10.25% interest rate raises a home loan of R1 069 634, and at 10% a bond of R1 088 058, thus R18 424 more. For more information on home loands and bond repayments visit mybondfitness.co.za SA Real Estate Investor Magazine OCTOBER/NOVEMBER 2019 31

Real Estate Investor Magazine South Africa October/ November 2019 | Page 33