It is always a pleasure to receive good news from one of my customers. Mashudu is a single mom with 2 kids yet she paid off her home in 10 years. Many more people can do what she has done

From: Mashudu [mailto:mashudu…..]
Sent: 01 February 2017 08:34 AM
To: Phumulele | Thuthuka-sa.co.za
Subject: Bond Paid Up

Good Morning Phume.

I don’t know how much i can thank you for the book, it has indeed opened my mind to financial freedom.

My house was registered on 17 Jan 2007 and as at 01 Jan 2017, i have managed to pay it off thanks to you and the person who bought me the book 4 years ago.

Last time we spoke you advised that it’s not a good idea to close off the bond account when the loan is paid up and hey that tip came in very handy because two weeks ago I had to get R 15,000 urgently because  my fridge broke down, and instead of buying the fridge on  credit, I withdrew from the bond and bought the fridge cash …………………………………………………………………………………………………………………………………….………………………………………………………………………………………………………………………………………….………………………………..

Thank you hey

Mashudu

A big thank you to Mar also allowing me to s story with you. Mashudu’s home loan account is now her own “bank” in that she can always borrow money from it and put the money back when she gets her salary

If you want to find out more about how to pay off your home in  10 years and other good money management tips, ask your company to invite me to conduct a talk or workshop for you and your colleagues. Email info@thuthuka-sa.co.za for more details on talks / workshops 

Now we continue with our series on buying a home.

MONTHLY / ON-GOING COSTS OF BUYING A HOME

1. Monthly bond repayment
2. Sectional Title Levies – if you buy a townhouse or a flat
3. Rates –  Property taxes
4. Electricity
5. Water & refuse removal
6. Insurances
7. Home owners comprehensive cover – mandatory
8. Life cover – to settle your home in case of death or disability OR alternatively
9. Credit life – which is expensive for you

1. Monthly bond repayment

Calculators are available on our website www.thuthuka-sa.co.za for those who want to check what their monthly bond repayments are going to for the home loan amount they want to take

Note – your monthly bond repayment increases whenever interest rates increase [if you choose a variable rate of interest] so you could end up paying more when interest rates increase.

2. Levies

If you are buying a flat or a townhouse, you are also going to pay levies. Levies are used to pay for the upkeep of common areas e.g. lifts, security, cleaning of yard or gardens, etc… Ask for the Audited Financial Statements of the Body Corporate so you get a good idea of what the levies are and if payments are up to date. The last thing you want is to buy into a complex where the majority of people are NOT paying their levies as this could result in the complex being run down and not maintained which reduces the value of the complex.

Sometimes special levies are paid for a limited period of time e.g. if new lifts must be installed, special levies could be payable for this.

3. Rates

These are taxes which are paid to the municipality

4. Electricity

It is much better if you have a stand-alone prepaid electricity meter because you will not be negatively affected if some people in your complex are not paying for electricity & you also pay according to your usage rather than based on the square meters of your unit.

5. Water & refuse removal

6. Insurances

You have a right to shop around for the most cost effective insurance. You do NOT have to take insurance that is provided by the same bank that offers you a home loan.

1. Home owners comprehensive cover – this covers the home owner in the event of e.g. geyser burst, pipe burst, flooding of the home, fire damage, etc…

1. Credit life

When you apply for a home loan, the bank will try to sell you credit life. They will tell you that credit life will pay off your home in case of death or disability or retrenchment. While this is correct, it is also important to understand that Credit Life is Expensive. For mortgage agreements, the maximum prescribed per month for credit life insurance is R2 for every R1 000 borrowed. On a home loan of R500 000, this works out to R1 000. This is the most expensive way of insuring your home against death or disability. Also, if you die after your home is paid up, all the monthly credit life premiums that you would have paid would be money down the drain. For more on this, see pages 110 to 126 of my book; From Debt to Riches: Steps to Financial Success

Is there a cheaper alternative to credit life? YES

1. Life cover

Life cover is the cheapest way to cover your home in the event of death. Also, the balance of your life cover would be paid to your beneficiaries.

Before you go shopping for a home; make sure that you do your budget and you know what the TOTAL cost of owning a home is.

Do you want life cover or do you want to compare if your life cover is cost effective? Drop me an email on info@thuthuka-sa.co.za