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Maya Fisher-French

20 years.

In this ex­am­ple, if you took the R250 000 from your mort­gage, your min­i­mum monthly re­pay­ment would in­crease by R2 500. You may think that this is a big sav­ing be­cause your monthly car pay­ment falls from R6 000 a month to R2 500 – and this is the mis­take peo­ple make. They look at the monthly af­ford­abil­ity rather than the fact that, over 20 years, that R250 000 will cost a huge R600 000.

The same ap­plies to any short-term debt, such as credit cards or per­sonal loans. If you set­tle your R20 000 credit card debt by draw­ing money from your home loan and not in­creas­ing your re­pay­ment, that R20 000 will end up cost­ing R48 000.

Also re­mem­ber that if you con­tin­u­ously use your mort­gage as an ATM ma­chine, you may still owe money on your home by the time you re­tire.

Con­sid­er­ing that most peo­ple will ex­pe­ri­ence a drop in in­come of be­tween 25% and 75%, you may strug­gle to con­tinue to meet those mort­gage pay­ments and pos­si­bly lose your home in re­tire­ment.

Your mort­gage may look like an at­trac­tive way to con­sol­i­date your debt, but it won’t be if it’s not used re­spon­si­bly.

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