4 Smart tips for spending your year end bonus

Homeowners who are fortunate enough to receive a 13th cheque or a bonus payment at the end of the year, should use at least part of it to reduce the capital portion of their home loan.

That's the advice of Carl Coetzee, CEO of SA's foremost home loan originator BetterBond, who says the best "present" consumers can give themselves this holiday season is to reduce their debt load.

Buyers, sellers and homeowners who can resist the urge to splurge, however, could get a lot more bang for their bonus buck this year - here's how:

Save for a deposit

While property prices are excellent and finance has never been more affordable, first-time buyers hoping to maximise their purchase power should still plan for a cash deposit.

"Buyers with a reasonable deposit tend to qualify for property finance more easily and get better interest rates on their home loans," says Leonard Kondowe, National Admin Hub Manager for Rawson Finance.

"The bigger your deposit, the smaller your loan, too. That can make a huge difference to the total interest you pay over the lifetime of your purchase."

"Of course, very few of us have a year-end bonus big enough to make a decent deposit on its own. Thankfully, there are plenty of small ways you can add to those savings.

Decorate on a dime

Every homeowner wants to put their own stamp on their new home, but decorating is expensive - particularly if you're starting from square one. If you're hoping to invest your year-end bonus into making your space a little comfier, cosier and more "you", you may want to wait for the January sales, says Kondowe.

"We often see stores clearing stock in January at great prices," says Craig Mott, Western Cape Regional Sales Manager for the Rawson Property Group. "If you're willing to pocket your bonus until then, you could pick up some real bargains."

Mott also suggests trawling festive season markets and thrift stores. "Newer isn't always better. Don't be afraid to buy preloved."

If you can't resist new, you can also make your money go further by embracing multifunctional furniture.

Invest in your property

According to Mott, homeowners and landlords can also put their bonuses to good use by investing in small improvements that add big value to their properties.

"Renovations like kitchens and bathrooms may not be in budget but adding a rainwater tank, installing energy-saving fittings or even planting a water-wise garden can add real value to your property for a relatively small investment."

For even bigger returns, Kondowe advises that it's always smart to invest any extra cash into paying your home loan off a little faster. 

"An extra couple of thousand rand can literally double or triple in value when used to reduce your total loan amount," he says.

Set the stage for a sale

Savvy sellers know that strategic home staging can bump buyer offers up significantly. Putting your bonus towards a deep clean and a little bit of sprucing could pay big dividends at the end of the day, says Mott.

"Cleaning and decluttering should definitely be a priority but if you have the finances, minor upgrades can be a great sales tool, too."

A good estate agent should be able to give you pointers on how to improve your home's appeal without going overboard. Mott suggests starting by making sure each room in your home has a visible purpose, even if that means furnishing a space you don't normally use. 

"Replacing old carpets with neutral, easy-care alternatives, or adding a fresh coat of paint and some flowers to your exterior can also be very effective," he adds. "Just try not to overspend on improvements you won't get to enjoy."