Property Advice

You've paid off your home loan, what now?

Private Property South Africa
Press |
You've paid off your home loan, what now?

The final repayment on your home loan is a long-awaited victory twenty to thirty years in the making. But, while most have us have been dreaming about this day from our very first repayment, most of us fail to consider what will happen thereafter.

According to Regional Director and CEO of RE/MAX of Southern Africa, Adrian Goslett, homeowners have one of two choices to make: either make the last repayment and close the home loan facility or continue to pay a monthly admin fee in order to keep the home loan facility open as a readily available line of emergency credit.

“The interest charged on a home loan is often lower than the interest charged on any other form of debt, such as credit cards or short-term loans. Some therefore choose to keep their home loan facility open in order to have access to the funds should they come to need it at a later stage in life,” Goslett explains.

To further outline the options homeowners have available to them at this stage in their home loan, Mary Lindemann, COO of BetterBond, SA’s leading home loans originator, explains that homeowners can close the home loan account for a cancellation fee of around R4000, after which the bank will release the property title deed to the homeowner. “The other option is to keep the account open and, if you don’t already have one, add an access facility to the account that will allow you access to the original home loan amount that you were granted. This offers some peace of mind provided that the facility is vigilantly managed and any amount that you ‘re-borrow’ is repaid as soon as possible,” Lindemann advises.

In terms of the process to follow, Lindemann explains that homeowners need to let their bank know of their intention to either keep the home loan facility open or to close it before they make the final repayment.

Consequently, Goslett recommends that homeowners start weighing up their options around this decision long before their final statement arrives. “This is not a straightforward decision to reach. I would recommend that homeowners take the time to work through the various pros and cons of each option before arriving at a final decision. Speak to your bank to find out about the various costs involved and consult a financial planner to get some professional advice on the way forward,” Goslett concludes.

Related Articles

Should you save or pay off your home loan?
Press | 04 Mar 2019

Should you save or pay off your home loan?

Is it better to pay off debt or put money into a savings account?

Lea Jacobs | 21 Sep 2012

Paying the Price of a 100 percent Loan

Although everyone celebrates when a drop in the interest rate is announced, not everyone, it seems, is benefiting from the decrease. Find out why here!

How investing in your own home gives you great returns
Press | 27 Mar 2017

How investing in your own home gives you great returns

Looking for the best return on your money? Paying just a little extra into your home loan every month is one of the best investments you can make.

sample image of property alerts

Get instant property alerts

Be the first to see property alerts for your area.
;