THE money TIP
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.