Budgeting advise

RIGHT now, many are taking advantage of the low interest rates, however, they will inevitably rise, says Leonard Kondowe, national admin hub manager for Rawson Property Finance.

Therefore, before a buyer commits to the maximum bond they can qualify for, he recommends they do a stress test by adding on another 2% so that, if there is an interest rate hike, they will still be able to afford to pay their mortgage comfortably and not fall behind as rates go up.

“Always try and accommodate potential future increases so that you can meet your other obligations as well. Obviously, the interest rates will gradually and slowly start going up by a 0.25%.”

Not only must buyers consider interest rate increases, and hikes in rates and levies, but they must make provision for inflation rate increases in order to sustain themselves throughout periods of increase.

“You must still be able to livewell and cover your basic needs plus your monthly bond payments. You wouldn’t want to fall behind on any of these payments as this may have a detrimental effect on your credit score down the line.

“Do your calculations – look at your expenses closely to see what you can cut out to gain more savings,” Kondowe says.

It is also in the best interests of a buyer or property owner to take advantage of the current interest rates to settle or close accounts, so they can be in a better financial position at a later stage.