An important question to ask when considering debt is "What will this debt cost me over the term of the loan?" Most people know what the interest rate of their home loan is, but very few know what that loan is costing them in interest.

Here is a simple example. If you buy a house for R1 million and finance it over 30 years at 13% interest it will cost you roughly R11 062 per month.  Here is the scary part, you will pay more than R2 997 132 in interest alone! So in actual fact the house has not cost you R1 million, it is costing you nearly R4 million. The only way to significantly decrease the total cost of the debt is to pay the loan off quicker.

Using the same example as before but pay it off over 15 years the total cost of that debt drops to R2.2 million, saving you more that R1.7 million! However, you are probably thinking that your repayment on this loan will increase drastically, and you would be right.  In order to do this you would need to increase your monthly instalment from R11 062 to R12 652.

Fast Track Solutions are specialists at creating individual solutions for our clients by leveraging off their short term debt, thereby allowing us to keep their monthly payments more or less the same but in the process allowing them to pay their house off in a fraction of the time. To learn more about how you can use Fast Track Solutions to pay your house off quicker click here.