Borrowing more than 100% on a home loan, also known as a no-deposit or high LTV (Loan-to-Value Ratio) loan, may appear attractive to South African homebuyers seeking to reduce initial expenses. However, this approach carries substantial risks and financial consequences that should not be underestimated.

The more you lend the more you pay…

The lender makes money by charging interest over time. If you can’t comfortably afford the repayments then you are borrowing too much. In the case of a car when you opt for a balloon payment at the end of the term you probably have over extended your purchase by that amount.

Home loans are no different…

Taking out a loan exceeding the property’s value not only increases the risk of negative equity if property prices fall but also leads to higher interest payments over the loan term. For instance, consider a R500,000 property where you borrow 100% of the value at an interest rate of 9%:

– Over 20 years, your monthly repayment would be around R4,533. (Total repayments R1 087 920). – Double the loan. 

– Over 30 years, your monthly repayment would be approximately R4,026. (Total repayments R1 449 360). Triple the loan. 

Do your home work

Extending the loan period from 20 to 30 years reduces the monthly installment but results in significantly higher interest payments in the long run. Before opting for a high LTV loan, carefully assess the long-term financial implications to ensure you can comfortably manage repayments and shield yourself from potential financial stress in the future. 

A Government of National Unity and a household are like two sides of the same coin when it comes to managing resources efficiently. Picture this: different political parties setting aside their differences to work together for the common good – that’s unity in action. Similarly, in a household, family members need to team up and use their strengths to handle the financial affairs collectively. Keeping on the same page by spending wisely, reducing wasteful consumption.

Budgetting

Take budgeting, for instance. Just like the government needs to decide where to allocate funds for public services, a family needs to figure out where to spend money on necessities like groceries and bills while setting some aside for savings. It’s all about making those rands count!

Planning ahead

Then there’s planning for the future. Whether it’s investing in infrastructure for the country’s development or saving up for retirement and the kids’ education, both the government and a household need to think ahead and make smart choices.

Contingencies

And let’s not forget about dealing with unexpected expenses. Just as a Government of National Unity needs to address crises and emergencies, a family needs to have a rainy-day fund to tackle unexpected bills or repairs.

So, whether you’re running a whole country or just a household, teamwork, smart money management, and planning for the future are crucial for success and well-being.

Preparing and submitting your tax return in for the 2014 filing season involves several steps. You would have noticed your various tax certificates being emailed to you from various institutions which should be kept in a file in preparation of your next tax submission. 

The dates for the 2024 Filing Season are:

• Individual taxpayers (non-provisional): 15 July 2024 to 21 October 2024
• Auto-assessment notices: 1 – 14 July 2024
• Provisional taxpayers: 15 July 2024 to 20 January 2025
• Trusts: 16 September 2024 to 20 January 2025

Here’s a concise guide to help you:

Gather Documents: Collect all necessary documents, such as IRP5/IT3(a) certificates, medical aid certificates, retirement annuity contributions, and other relevant financial documents.

Register on eFiling: If you haven’t already, register on the South African Revenue Service (SARS) eFiling portal. This platform allows you to submit returns, make payments, and access tax-related services online.

Auto Assessments: SARS may issue an auto-assessment based on data from employers, financial institutions, and other third parties. If you receive an auto-assessment:

• Review Carefully: Check the details against your records for accuracy.
• Accept or Edit: If the assessment is correct, accept it on eFiling. If there are discrepancies, make the necessary corrections and submit the updated return.

File Your Return: If you do not receive an auto-assessment, complete your return on eFiling:

• Fill in Details: Enter income, deductions, and other relevant information.
• Validate and Submit: Validate the return for errors, then submit it.

Respond to Queries: SARS may request additional information or clarification. Respond promptly to avoid penalties.

Payment: If there is tax payable, ensure you make the payment by the due date to avoid interest and penalties.

Using eFiling and keeping thorough records can simplify the process. Always verify auto-assessments for accuracy to ensure a smooth tax season.

From the 1st September 2024 your retirement fund will be restructured into three components designed to allow you access to a portion without having to leave your employer. Contributions in the future will be split into two pots.

The Vested Component

Your total retirement fund as at the 31st August 2024 will vest and be made fully available to you as before where you can:

Stay a paid up member

Withdraw and take the cash 

Transfer to another fund

The Savings Pot

10% of the vested fund up to R30 000 will be transferred across to a Savings account which will start from the 1st September 2024. One third your future retirement contributions will be allocated to this savings account with the following conditions:

Withdraw a  portion or in full

Once a year

A minimum of R2000

A tax directive will be applied and the amount is added to your taxable earnings for the tax year. SARS will take any outstanding taxes owed before releasing remainder of the withdrawal. 

The Retirement Pot

The two thirds of your future contributions from the 1st of September will be invested in a retirement component which will only be available as a pension for you at retirement. 

What you should do

Ideally, you should leave your vested, savings and retirement components alone as the more you save the better your pension will be. The Savings component is only there for emergencies as a last resort. 

When you leave your employer don’t cash in and pay tax. Rather preserve and keep the tax in your investment which will make a huge difference to the future value.