Pay off your home loan be­fore you re­tire

Business Day - Home Front - - HOMEFRONT -

BOND-FREE It is be­com­ing in­creas­ingly im­por­tant for those ap­proach­ing re­tire­ment to en­sure that their home will be bond or rent-free. That’s the word from Tjaart van der Walt, CEO of the RealNet es­tate agency group, who notes: “The cost of liv­ing con­tin­ues to rise. Re­tirees may ex­pe­ri­ence some re­lief when­ever the Re­serve Bank raises in­ter­est rates and they earn more from their sav­ings, but this will be negated if they are still pay­ing off a home loan.”

How­ever, re­tirees who own a fully paid­for prop­erty will not have the worth of their pen­sions or an­nu­ities eroded by in­creases in the home loan rate or in rent, and will have some lee­way in terms of in­fla­tion, in that they will prob­a­bly be able to free up some money if nec­es­sary by “trad­ing down” to a smaller prop­erty that is also fully paid-for.

Mean­while, he says, those for whom re­tire­ment is still some way off should be putting spare cash into their home loan ac­count, in or­der to re­duce the cap­i­tal and pay the loan off faster.

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