Utilizing house mortgage funds for setting aside funds for future objectives or challenging circumstances
In South Africa, homeowners can strategically utilise their home loan access funds facility to manage their finances more effectively. This facility, often referred to as a redraw or extra bond credit, can be a powerful tool for reducing interest costs, managing cash flow, and funding investments wisely.
According to FNB's Chief Imagineer, Jolande Duvenage, homeowners should treat this facility as both an emergency fund and an interest-saving savings vehicle. One key strategy is to use the access to funds to offset or reduce the home loan balance. By keeping surplus funds in the bond account, the outstanding principal decreases, leading to a reduction in the interest charged, which accumulates daily, and saving money on interest over the loan term.
Another strategy is to use the redraw facility to manage large expenses or emergencies without applying for a separate loan, often at a lower interest rate than personal loans or credit cards. This approach can provide financial resilience during unexpected events.
The facility can also serve as a savings tool. By depositing extra capital when possible and withdrawing only when needed, homeowners can force disciplined savings within a low-risk, interest-saving environment.
Mfundo Mabaso, the Product Head of FNB Home and Secured Lending, emphasises the importance of building the habit of paying extra on bond repayments to increase access to funds over time. These additional funds can be reallocated to pressing needs, long-term ambitions, bridging short-term expenses, consolidating higher-interest debt, renovating a house, funding further education, or starting a side hustle.
FNB's nav" Home, a digital tool available on the FNB App, is helping homeowners gain control over both short and long-term property decisions. The tool provides detailed bond information, live property valuations, and even access to 5-star rated home service providers.
In volatile economic times, a home loan can support a broader financial plan. By treating their home as a dynamic part of their financial plan, customers can use it to grow and retain wealth.
So, the next time you consider your home loan, think beyond just debt. With careful planning and strategic use, your home loan can be more than just a financial obligation; it can be a valuable asset for your future.
Homeowners in South Africa can use their home loan access funds facility as a savings vehicle, allowing them to deposit extra capital and withdraw only when needed, fostering disciplined savings within a low-risk, interest-saving environment.
By paying extra on bond repayments, homeowners can increase their access to funds over time, which can be reallocated to various purposes such as managing large expenses, funding further education, or kickstarting a side business.
A strategic use of the redraw facility can help homeowners save money on interest, as keeping surplus funds in the bond account reduces the interest charged over the loan term, especially during unexpected events like emergencies where separate loans might carry higher interest rates.
