A key part of owning a home and having a home loan is ensuring you are budgeting and saving should the unforeseen happen.
During the current economic crunch, this has never been more crucial. To help homeowners save money for times when bond repayments and home repairs become difficult to undertake, Standard Bank advises:
Create an emergency fund
It is smart to consistently save for that "rainy day". An ever-growing emergency stash will allow you to solve unforeseen problems that could some day put your monthly instalment under threat.
Don’t skip important repairs
Try not postpone household repairs or you could end up with a bigger, more expensive problem.
Invest your annual bonus in your bond
If you receive a bonus or windfall, it’s wise to use that money to help pay off your home loan. Not only will your bond be paid off sooner, you will save a lot of money in interest and this build-up of equity can help in the case where you temporarily cannot afford your monthly instalment, or you need to sell quickly.
Get insured
Getting home insurance is the best thing you can do to keep your home in good condition.
Insurance can help you pay for repairs. In the case of life or retrenchment insurance, this can be used to partially pay or settle the bond due to an unforeseen event.
Monitor your electricity and water usage
These are areas in which people are often the most unintentionally wasteful.
Not only does this put pressure on your monthly finances, but it could also hinder your ability to sell your home easily.
Increase your instalment to above the minimum required
If you can pay more into your bond than your agreement requires, but you don’t have a lump sum, speak to your bank about increasing your instalment. Even a small amount will compound over time, saving you interest and increasing the equity in your home.
Fix your interest rate for a period
If you are concerned about rising or volatile interest rates and your monthly budget is tight, sometimes certainty helps.
However, fixing an interest rate would come at a higher but more certain cost and this trade-off needs to be carefully considered.