14 September 2021
Your neighbour’s done it, your friends are doing it, and even your co-workers are talking about it. But what exactly is home refinancing, and how can it benefit you?
Quite simply, home refinancing is one of the most effective ways to release cash, reduce monthly expenditure and improve your financial position.
Residential properties in South Africa have shown a trend towards increasing in value over time. This means that if you’ve owned your home for a number of years, the likelihood is that it’s worth more now than it was when you purchased it. When you refinance your home, you’re securing a new mortgage for your property based upon its current value, and not on the amount it was valued at when you took out your initial home loan.
This can give you access to equity that you can use to improve your standard of living or strengthen your financial standing.
What is Equity?
If you owe R 500 000 on your home loan, but your home is worth R 800 000, there’s a R 300 000 difference in value. This is known as “equity”. Through home refinancing, you can apply to access this equity. Basically, equity is the difference in value between what you owe on an asset, and the value of that asset.
If you refinance your home for its current value, you could access the equity accumulated in your property. Essentially, it’s a line of credit being extended by your lender, and thus you will pay interest on it. However, if you secure low interest rates, such as those offered by SA Home Loans, it offers a valuable means of improving your financing position, consolidating debt or paying for important big expenses.
There are a number of reasons for refinancing property in South Africa. Home owners may wish to reduce their monthly costs, and home refinancing can assist in achieving this. Refinancing your home at a lower interest rate could allow you to make considerable savings each month, translating to thousands of rands over the life of the loan.
Another reason for home refinancing is to access equity, so that you have the means to pay for large expenses such as tuition fees or renovations. When you refinance your home, you’ll gain access to this equity at a competitive interest rate, which means that you’ll have the cash you need at an interest rate you can afford.
Lastly, home owners might find themselves in a tight spot financially and may choose to refinance their home in order to consolidate debt. Debt consolidation allows you to combine your up to date, short term debt into one lump sum and repay it at a more affordable interest rate than you may currently be paying.
The process of moving to SA Home Loans from your current lender is simple, speedy and hassle-free. We do all the hard work for you, and all you have to do is furnish us with a few relevant details.
Apply now for home refinancing from SA Home Loans, and you could benefit from significant savings and a more manageable bond solution. Contact us now on 0860 2 4 6 8 10 to speak to our home refinancing experts, to secure the best deal on your home loan.