The series of interest rate hikes have made the cost of monthly home loan repayments soar for many homeowners. For those who took out a R1 million home loan when interest rates were at their lowest in July 2020, the bond repayments would now be almost R2,800 more expensive at the current interest rate.
“Although it can be difficult given the last steep interest rate increase, homeowners need to prioritise keeping up with the repayments on the home loan or risk losing the house and tarnishing their credit score,” warns Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.
How to downscale
“If things get too tight, act sooner rather than later. Rent out a spare room in your home to help you afford the repayments or downscale to something more affordable before things get too out of hand,” he recommends.
Goslett adds that living in a smaller space is also far more cost effective, which could help struggling homeowners keep up with the rising cost of living. “Larger homes often mean running up larger water and electricity bills than a smaller home would. That translates into more disposable income every month for those who choose to downscale,” Goslett explains.
By downscaling, homeowners might also need to sell some furniture and other items that might not fit into the new home. This could also bring in some extra cash to help cover the higher costs of other debt repayments.
“When moving to a smaller home, every square metre becomes essential. This usually means fewer spaces to clean and less space in which to store unnecessary items, which could create a less stressful, less cluttered home,” he adds.
For those who are unsure about whether they are ready to downscale, Goslett recommends setting up an appointment with a local property practitioner to discuss the possibilities. “It can be a lot easier to make up your mind after viewing a few options in person. You might be surprised by what you find when you start looking. If you establish a good working relationship with a reliable property professional, they can then walk you through your options and provide you with some valuable guidance along the way,” Goslett concludes.
Writer: Kayla Ferguson