PAYING extra into a monthly home loan provides an opportunity for investment during the current global uncertainty, home loan originators ooba said yesterday.

“If for example you have a R1m home loan at a rate of 14% (1½% below prime), on each extra rand you put into that bond you are effectively earning 14% on that money,” a company statement said.

This also puts the bond holder closer to becoming bond free and saves on interest charges.

A home owner would have to pay R12440 on a R1m bond at the moment had he borrowed at 14%, according to an example provided by Jenny Rushin, provincial sales manager at ooba.

Putting R1000 extra into that bond every month means an interest saving of R635750.14 and drops the repayment period of a 20- year loan to 14.58 years.

Rushin said that even in these tough times, each little bit extra invested into a home loan was worthwhile. “Just skipping a few pricey coffees here and there means you could invest an extra R100 a month into a bond. On a R1m bond financed at 14% over 20 years, that means a saving of R99536.43.

“It’s well worth it,” she said. — Sapa