The best 100 money tips ever! 61- 80

This is the fourth part of five posts on The best 100 money tips ever.
Click below to read the other posts.
1- 20
21 - 40
41 - 60
61 - 80
81 - 100

61. Always negotiate your interest rates. Shop around. A one-percent difference can have a significant effect. On a R100 000 mortgage bond over 20 years at 15 percent, you will repay R316 029 in total. At 14 percent, you will repay R298 444 – a saving of R17 584.

62. When mortgage bond interest rates come down, keep your repayments at the same level. You will pay off your bond quicker and save yourself a whack in interest repayments. Repayments will also not be so difficult to contend with if interest rates rise again.

63. If you take out a home loan when interest rates are low, always ask yourself whether you will be able to afford the repayments if interest rates go up. If you are in doubt, take out a smaller loan.

64. Most mortgage bonds enable you to repay more than your set repayments and to borrow against what you have paid. This is useful not only to borrow money for other things at short notice, but also to use as a savings account. The effective interest you receive is much greater and there are no additional costs. Say, for instance, you need to put away money to pay school fees or provisional tax. “Save” the money in your mortgage bond until you need it, rather than in a low-interest bank savings account.

65. Get a pre-approval agreement on a mortgage bond before you start looking for a home. This will give you the advantage of being able to shop around for the best rate while you’re not under pressure and the buyer will be more willing to sell to you knowing that the money is available.

66. Always have a lawyer check a property deed of sale before you sign up. Also make a deed of sale subject to conditions such as a proper inspection being done, if you suspect building faults, and to raising a mortgage bond, if you need one.

67. A bank valuation of a property is not a guarantee that the building is structurally sound. If you suspect a problem, get a full structural survey before you enter any contractual agreement.

68. Don’t fall prey to what is called a mortgage bond-linked endowment. With these products, you are encouraged to take out a home loan, repay only the interest, and invest the amount that would have repaid the capital. The theory is that, at the end of the period, the investment should be worth more than the capital. With high interest rates and poor investment returns, these are high-risk products.

69. If you take out life assurance, always declare any health problem or habit or hobby that might affect your insurability. You may have to pay more in premiums, but at least your dependants will receive the money if and when a claim is made. If you lie, either by omission or commission, your dependants may be left with nothing. The life assurance company is legally entitled to repudiate any claim when incorrect information is provided, even if it is not associated with the cause of death or disability.

70. Never buy too much life assurance against death or disability. The purpose of life assurance is to ensure you and your dependants maintain a standard of living, not to enrich dependants in the future. Too much life assurance merely means you are paying out more in premiums and costs, and you have to accept a lower standard of living now.

71. Always avoid cashing in an investment (endowment/universal) policy before its maturity date. Cashing in is costly. Not only could you receive less money than you have paid into the investment, but if there is life assurance cover attached to the policy, you may not be able to replace the cover in the future, particularly if you are less healthy.

72. When taking out life assurance cover against dying or being disabled, always establish whether the premiums are guaranteed – and for how long. It is preferable to get a longer term guarantee on your premiums.

73. If you have no option but to surrender a life assurance investment policy, always see if you cannot get more than the surrender value offered by the life assurance company by trading the policy on the secondhand market.

74. Rather than surrendering a policy, consider other options, such as making it paid-up so you can stop paying premiums. You may also be able to take a loan against the policy, but check the interest rate; sometimes it is higher than it would be if you used the policy as security to get a bank loan.

75. If you are concerned about volatile markets, one of the best investment products you can get is a life assurance smoothed bonus policy that guarantees your capital and smooths out the market returns.

76. If you intend the benefits of a life assurance policy to go to someone in particular, have this on record with the life company by naming the person as the beneficiary of the policy. This has two advantages: You do not pay executor’s fees of up to 3.75 percent with VAT on the amount; and the beneficiary receives the money almost immediately, without it being tied up for months or even years while your estate is finalised. More often than not, your dependants will need the money immediately after your death.

77. If you can afford a hamburger and Coke every day, you can afford life assurance. Life assurance is essential for anyone who has dependants.

78. If you plan to stay single with no dependants, you do not need life assurance against dying, but you do need disability assurance in case you become ill or are injured in an accident.

79. It is not saving if you put money away at the start of the month but withdraw it before the end of the month. Life assurance investments are useful for people who find it difficult to save, because they commit you to a contract for at least five years and cost you dearly if you break the contract.

80. Do not take out a life assurance investment contract for more than 10 years. You don’t know how your financial position could change. At the end of the period you can always extend the contract, but if you have to cut it short, there are penalties involved that could see you getting back less money than you paid in. The main reason life assurance sales people attempt to get you to take out longer-term policies is because they receive more commission.

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