Thembi [not her real name] contacted us. Like most of us, she is going through a tough time financially because her salary was reduced by 30% due to Covid-19. She is happy she still has a job but she is falling into arrears with some of her monthly financial commitments, including school fees for her daughter who is in matric and varsity fees for her son. As I went through her forms, bank statements, etc… to find money somewhere to help her get out of the sticky situation, I realised that she has a home loan and we sent her the following questions about the home and the home loan;
- Where is the home situated?
- When did she buy the home?
- What was the original loan amount?
- What is the outstanding balance?
- Is the home loan in arrears? Thank goodness it is not
- Has she checked her credit record recently? We sent her the link to check her credit record because this is the most important fact. I always emphasise that you must act ASAP if you feel like you are drowning in debt. Act as soon as possible before your credit record is messed up. Once your credit record is messed up, no one will give you a loan hence I assert “ Banks give money to those who don’t need it’ Fortunately, her credit record is still positive so we could proceed
During the consultation, I pointed out that the cheapest way to pay the high school and university fees for 2020 and to also have funds available for the 2021 varsity fees was to take a further bond against her home loan. A home loan is the cheapest form of debt, repayable over a longer period so she would be able to manage the lower monthly bond repayments given that her salary has been reduced by 30%. To ensure that she still pays the home loan off before she reaches retirement age, she must than increase the monthly instalments as soon as she is able to do so. Her son will be in his final year in 2021 so hopefully the financial situation will improve from 2022 and then she can pay more towards the home loan.
We managed to get her R379 000 @ 6,75% and her financial woes are now behind her. She has paid all the outstanding fees for 2020 and has even prepaid the varsity fees for 2021 as she says she doesn’t want to be tempted to use the funds during the festive season
So if you want us to help you to get money against your home, whether it is paid up or you are still paying for it, email us firstname.lastname@example.org
To understand more about how to use a home loan to your advantage, read the Chapter entitled ; How to use your home to create wealth for your family in the book From Debt to Riches: Steps to Financial Success