Diversion of Home Loan Proceeds for Future Saving or Emergency Purposes
In South Africa, homeowners can leverage their home loan access funds facility as a versatile financial management tool to save, manage money, and achieve their financial goals. This facility, often called a home loan overdraft or flexible bond facility, allows homeowners to access available funds on their home loan account, combining borrowing and saving in one facility.
By depositing extra money into their home loan access facility, homeowners can reduce the outstanding loan capital and decrease interest charged on the home loan, potentially saving thousands over the life of the loan. This strategy is beneficial as it allows homeowners to save and manage their money more effectively.
When the need arises, homeowners can access these funds without applying for new credit, providing liquidity for future plans or emergencies. The funds can be used for a variety of purposes such as bridging short-term expenses, renovating their home to increase value, funding education, or even starting a side hustle.
Homeowners can also consolidate higher-interest debts by withdrawing from their home loan access funds at a lower interest rate compared to credit cards or personal loans, thus reducing overall interest costs. Using the facility as a forced savings mechanism, where regular deposits reduce interest, but funds remain accessible, encourages disciplined saving while preserving flexibility.
To achieve financial goals strategically, homeowners should monitor their spending closely, use the facility primarily for planned or essential expenses, make extra repayments when possible, consider reinvesting savings from lower interest payments into other investments or financial goals, and combine this strategy with market opportunities such as investing in repossessed houses at discounted prices.
Mfundo Mabaso, Product Head of FNB Home and Secured Lending, emphasises the importance of treating the home as a dynamic part of a financial plan and aligning the use of the home loan access funds facility with a bigger financial plan. FNB's nav" Home on the FNB App is a digital tool that homeowners are using to gain control over both short and long-term property decisions.
By actively managing the home loan access funds facility, homeowners in South Africa can reduce interest costs, increase savings flexibility, consolidate debts, and fund key expenditures, thereby facilitating improved financial control and progress towards long-term wealth building.
- By depositing extra funds into their home loan access facility, homeowners in South Africa can save money in the long term by reducing the outstanding loan capital and decreasing interest charged, potentially saving thousands over the life of the loan.
- Homeowners can use the funds from their home loan access facility for a variety of purposes, such as bridging short-term expenses, renovating their home to increase value, funding education, or even starting a side hustle.
- Homeowners can consolidate higher-interest debts by withdrawing from their home loan access funds at a lower interest rate compared to credit cards or personal loans, thus reducing overall interest costs.
