THE money TIP

CityPress - - Business -

At City Press, we al­ways ad­vo­cate pay­ing off your debt early. How­ever, be­fore you pay off your mort­gage en­tirely, con­sider the fact that it could ac­tu­ally save you money to keep it go­ing for a lit­tle longer, de­pend­ing on your fi­nan­cial needs and life­style.

A home loan of­fers you the cheap­est debt avail­able and you can save a lot of money in in­ter­est by pay­ing off other debt first, such as per­sonal loans, credit cards and car fi­nance. Ac­cord­ing to FNB, if you close down your bond, you will no longer have im­me­di­ate ac­cess to debt at low in­ter­est rates, which you could use for ren­o­va­tions, or per­sonal cash flow man­age­ment.

Your mort­gage can also be used to fi­nance an­other prop­erty, so think twice about your in­vest­ment needs be­fore you close it com­pletely. Fi­nally, re­mem­ber that there are can­cel­la­tion fees in­volved.

“You will be li­able for bond can­cel­la­tion fees and may be charged ad­di­tional in­ter­est if you fail to no­tify your bank 90 days in ad­vance that you are plan­ning to close your home loan ac­count,” said FNB.

If you are un­cer­tain about pay­ing off your bond, speak to an ac­cred­ited fi­nan­cial ad­viser.

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