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How To Pay Back Your Mortgage Loan Faster Than Everyone Else

Written by Ben Shaw, CEO of  HouseME, Smart Property Rental for Landlords and Tenants.

Reading Time: 5 Minutes

Many rental property investors bite their nails each month, praying that their tenants pay on time, and the right amount, and into the right account – so that they can pay their bank for their mortgage loan.

And many rental property investors continue to wonder, years into their loan repayment, whether their investment is going to really benefit them in the long run. It’s a problem that technology can really solve.

Rental management technology unlocks investment return (or ‘yield’) by ensuring a steady flow of income each month, and also by helping determine the right amount to charge for rental.

We’ve put together our top pieces of advice for how to pay off your mortgage loan faster, and it’s not as hard as you might think.

8 Steps To Help You Settle Your Home Loan Ahead Of Schedule

1. Use Rental Income To Pay Off Your Mortgage Loan

A typical property mortgage loan in South Africa is between 20- and 30-years and is made up of an interest and a capital portion. This means that when you pay the bank, you’re paying back the original amount borrowed, and the interest charged on this amount. You certainly don’t want to fund this all yourself – use the tenant’s rental payments to pay off the monthly charge.

2. Determine A Fair Monthly Rental Income

You’ve already worked out that you’ll use rental income to pay off the loan. But are you getting enough from your property? Online calculators, bond specialists and agencies sure don’t know. But the free market does! Allow for dynamic pricing each year (where various tenants offer different prices) so that you can always earn what’s fair for your property. This higher amount will allow for more of the loan to be repaid by your tenant, rather than your own pocket. HouseME’s PlaceME Tool does this automatically for you, and every month we earn landlords using it, an average of 2% more than they thought they’d get!

3. Secure Your Tenants In Advance

Vacancy is the enemy of rental income. Every month your property stands vacant, a loss is recorded. And this means you’ve had to pay the loan all by yourself – without a tenant contribution. Avoid vacancy by marketing widely, and well ahead of time of a current tenant’s move-out. Using proptech platforms really help to do this – because by creating one profile and property listing, your property is advertised on many sites, nationwide.

4. Secure Your Rental From Your Tenants.

Not all tenants are created equal. Some pay on time each month, some in advance. Some pay late and others never pay. If you’re using a procurement agent or sourcing tenants yourself you know that sinking feeling all too well. You got a great tenant, she’s moved in and the agent has collected his fee, but three months later you’re behind in mortgage loan instalments because the tenant has mysteriously become uncontactable. Take out HouseME’s Rental Guarantee to avoid this! Paying a nominal amount to gain peace of mind, and protect against a month’s lost income is more than worthwhile. It also ensures that you stick to your repayment plan!

5. Compare Costs Of Management

2.5% is all HouseME charges for full management of your property. Isn’t that better than the 5 or 6 or 10% you’ve been paying at Joe Agent down the road? If you’re paying 10% and could move to HouseME at 2.5%, an additional R10,000 could be put into your mortgage each year (using an R11,000/m rental as an example). Surely a switch is worth considering?

Please note: Pricing changes were implemented as of the 10 September 2020. More details here.

6. Compare Costs Of Procurement.

One month’s rental upfront, paid to an agent who is going to leave you with all the risks of managing the rental and keeping the property maintained hardly seems like a fair deal. Imagine what it would do to your mortgage payments if every year you could do away with this cost of finding a new tenant? At HouseME, there is no procurement fee (unless you’d like our very practical Assist package) which means you save with every lease.

7. Get The Right Advice

Finding and keeping a tenant isn’t easy. Maintaining a property isn’t easy. Dealing with emergencies is more stressful than supporting a football club in the English Premier League. So, get some peace of mind and get your property into the best shape possible. By being professionally maintained, covered against emergencies and looked after by excellent tenants, not only will you be confident that your property’s value will appreciate, but tenants will opt to stay longer – and hopefully pay more for the privilege!

8. Review Your Investment Returns Often

Download our excel calculator to determine how much yield you could be making each month, depending on who services your property. Look out for industry tips and information about area pricing that you can take advantage of. For example, it would be a great idea to update your property listing text with the latest lifestyle centre developments happening in your property’s neighbourhood. If you’re not using a pricing tool to get the best rental, a rental guarantee to secure tenants’ income and a platform that charges the lowest management fee, you’re doing it wrong!

Let Us Help You Settle Your Mortgage Sooner

Although navigating the property investment world can appear complex, having the right partner really does help. Let us help you pay back your mortgage faster, and join 1,000s of other landlords doing the same!

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