Bruce Whitfield
  • Following the rate cut this week, you will pay R166 a month less for every million rand in home loan debt.
  • If you kept your home loan repayment unchanged, at the level before the cut, you will save more than R84,000 per million over the course of a 20-year bond.
  • For more stories, go to Business Insider SA

The Reserve Bank has made your mortgage R166 a month cheaper for every million rand you have in debt on your home over 20 years.

Nice. But it’s probably not going to rock your world. It’s barely enough for five take-away cappuccinos. Where it can have a huge impact is if you keep paying exactly the same on your mortgage than you did before the cut became effective.

Here’s the maths:

At 10.25%, you pay R9,816 a month, following the cut, that amount is reduced to R9,650. Hence the saving of R166.

Now, the power of compounding. It can either work for or against you.

By maintaining your mortgage payment rather than frittering away the R166 on something as pointless as an extra coffee a week, you could save R84,147 over the 20 years of the bond.

If you have a mortgage of two, three or more million, the maths becomes even more compelling.

Beat your debt before it beats you. It’s the first step to financial freedom.

Bruce Whitfield is a multi-platform award-winning financial journalist and broadcaster.

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