Pay off your home loan before you retire
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.