Swaziland Building Society (SBS) advises customers on how to make a home loan more affordable. Making your bond affordable involves strategies focused on reducing the amount borrowed, lowering the interest rate and managing ongoing repayments effectively.
Senior Mortgages Officer Phindokuhle Dlamini says home loans can be reduced by improving your credit score to secure a lower interest rate, making extra payments to reduce the principal balance and pay less interest over time. Dlamini added that renting out a portion of your property can also help reduce bond repayments.
She went on to say that it is also advisable to generate rental income: Rent out a spare room, a cottage or a separate entrance to create an additional income stream that can be used to help cover your bond payments. “Adding a rental unit through a renovation can provide a new revenue stream. Focus on renovations like kitchens and bathrooms, which are most likely to increase property value.
“Other strategies include making a larger deposit upfront and comparing loan offers from different lenders and if your loan has an access facility, using it to ‘save’ by depositing excess funds that can be accessed later,” she said.
Dlamini mentioned that when you boost your credit score, it gives you a better chance of qualifying for a lower interest rate. She said a larger down payment reduces the total amount you need to borrow, which can lead to a lower monthly payment and less interest paid over the life of the loan.
She said making extra payments, even small amounts, when possible, can significantly reduce the loan’s principal, saving you money on interest and shortening the loan term.
“If your loan has an access or redraws facility, you can make extra payments and keep the funds accessible for future use. This can help you pay down the principal faster while retaining some financial flexibility,” said Dlamini.
When securing the bond
Buy within your means: Choose a home that makes the monthly repayments manageable within your budget. Generally aiming for no more than 30 per cent of your gross monthly income.
Consolidate high-interest debt: Home loan interest rates are typically lower than those on credit cards or vehicle finance. Consolidating other debts into your home loan can lower your overall interest costs, provided you maintain accelerated repayment schedules on the consolidated amount.
Avoid extending the loan term: While extending the repayment period will lower your monthly payment, it should be a last resort as it means paying substantially more interest over the life of the loan.
Communicate with your lender: If you anticipate financial difficulty in meeting your repayments, contact your financial institution immediately to discuss options and avoid a negative impact on your credit score.
For further assistance, customers are encouraged to contact the SBS Mortgage Department at 2405 6119, email mortgages@sbs.co.sz or visit the nearest branch.
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