How you structure your home loan financing will directly affect your cash flow and financial elasticity for a very long time. Some people believe that paying off your home loan as quickly as possible is the best route. IGrow Wealth Investments’ CEO and founder,  Jacques Fouché, encourages leveraging Other People’s Money (OPM) through a home loan. This will increase your chances of being able to leverage the equity in your loan as your home increases in value to invest in further property purchases to grow your wealth.

Instead of paying off your home loan in the quickest way possible, you could take another route. In this post, we will discuss how you can either extend the term of your home loan or reduce the principal amount by paying a bigger deposit upfront. 

IGrow Home Loans will look more closely at your home loan financing so you can improve your bank balance and expand your property portfolio. We will cover  5 steps to lowering your home loan repayments:

• Step 1: Extend your loan term to reduce monthly repayments
• Step 2: Add more cash to your deposit to lower your home loan amount
• Step 3: Leverage OPM to maximise your ROI for your property investments
• Step 4: Choose the best interest rate option
• Step 5: Explore alternative home loan financing options

Step 1: Extend your loan term to reduce monthly repayments

An effective way of lowering your monthly home loan finance payments is to opt for a longer repayment term.

You can extend your home loan term as follows:

• Opting for a 30-year term means you’ll have lower monthly repayment amounts when compared to a 20-year loan. This improves cash flow and frees you up to reinvest elsewhere.
• A longer home loan term means: more interest will be paid over time, but if you are buying to let, this expense can be reduced through careful tax management and your rental income..
• Extending your loan term makes it more affordable to leverage OPM and invest in buy-to-let property.. This is ideal for first-time investors looking to grow their property portfolios.

The nifty IGrow Home Loans Bond Repayment Calculator will help you compare different home loan terms quickly and effectively. By typing in the loan term and property price,and deposit if you have one,  you will quickly work out your monthly repayment amount. Within a few seconds, you can tell what effect this will have on your general finances.

Step 2: Add more cash to your deposit to lower your home loan amount

 If you’d prefer to lower your total home loan amount, not just your monthly repayments, an upfront deposit is a wonderful strategy!

While 100 percent home loan financing is an option, a deposit offers several advantages, such as:

• Lowering monthly repayments: because you’re borrowing a smaller amount.
• Reduced interest, which is paid over the loan term.
• Improved likelihood of securing better interest rate terms, because the financial lenders view lower-risk applicants in a better light.

IGrow Home Loans recommends saving at least 10-20% of the property value (ahead of time) to put towards your deposit. However, where investors want to expand their property portfolios, leveraging 100 percent home loan financing may be a wiser approach. Your IGrow Investment strategists can advise on what is best for your stage of the investment journey. 

Step 3: Leverage OPM to maximise your ROI for your property investments

As mentioned, Jacques Fouché encourages leveraging of Other People’s Money (OPM). This is, in essence, to accelerate wealth creation. Instead of concentrating on paying off your home loan faster, look at how financing multiple properties generates better Return on Investment (ROI)

Property investors should ideally:

• Use bank financing strategically so you can own multiple properties by using minimal personal capital upfront.
• Invest in positive cash flow properties so that the rental income can cover bond repayments. This makes it simpler to grow your property portfolio.
• Direct surplus funds into acquiring more property assets: this will increase your net worth substantially.

By partnering with IGrow’s property investment specialists and home loans, you’re putting yourself in a strong property investment position. The team at IGrow will help you structure your home loan financing to get the most out of your property investments!

Step 4: Choose the best interest rate option

IGrow Home Loans will handle application and interest rate negotiations with multiple banks and financial institutions on your behalf. This takes all the stress off you. 

Our team has excellent relationships with major South African banks and other financial institutions. They have been in the business for almost 2 decades, so they are adept at securing the best home loan and interest rate terms, obtaining an average of 0.5% lower interest rates on their clients’ home loans. 

They also process your application for you, so you only have to complete one set of paperwork and one document submission, and they will do the rest of the work to submit multiple applications simultaneously. The parallel submission process also means the banks compete for your business, raising the likelihood of you getting better loan terms. 

Having the best interest rate structure in place will impact your home loan repayments and save you as much as hundreds of thousands of rands over the lifetime of your bond. 

By clicking through to IGrow’s Bond Repayment Calculator, you’ll quickly discover your repayment amounts. Our Home loan division can help make your home loan application as smooth as possible!

Step 5: Explore alternative home loan financing options

Traditional bank-based loans are the most common way to finance a home loan.

Alternative home loan financing options, on the other hand, provide greater flexibility:

• Private lenders can sometimes offer personalised loan terms as agreed upon by both the lender and the investor (applicant).
• Seller financing means property investors can negotiate directly with the property seller. Sometimes, this form of financing offers better rates.
• Joint home loans mean investors can join together to pool their financial resources and split financial responsibilities. (View our blog post on joint home loans and the perks associated with sharing financial responsibility with a fellow home loan co-applicant: Joint Home Loans: Unlocking the Doors to Your Property Investment Dreams).

 IGrow Home Loans guide our investor clients through both traditional and alternative home loan financing. We help you find the right fit for your tailor-made property investment strategy.

The best way to finance a property purchase

For investors seeking a 100 percent financed home loan, IGrow Home Loans can evaluate your financial position and, if you are eligible, advise on competitive home loan options that can eliminate the need for a deposit. This means first-time buyers and investors, if eligible, can leverage 100% bank financing without putting in a large deposit upfront. 

Optimise your home loan strategically with IGrow Home Loans

It is possible to lower your monthly loan repayments with the right strategy in place. By extending your loan term, by leveraging OPM to grow your property portfolio, or by putting down an upfront deposit, IGrow is by your side, every step of the way!

Contact IGrow Home Loans today and steer your property investment journey in the right direction!