Loadshedding is making consumers look for energy alternatives – can you use pension backed home loans to help take you off the grid?

Ncumisa Madinda Executive: Member Solutions at Momentum Corporate

Consumers are in a tight financial squeeze: an increase in fuel prices in February, coupled with another 25 basis points at the end of January. Inflation eased slightly in December to 7.2% from 7.4% in November, however food and fuel prices were still higher that the targeted range for inflation.

This is on the backdrop of major strain on the power grid with energy utility Eskom struggling with stable power generation. As a result, more consumers are considering energy alternatives to keep the lights on in their homes. This also because of the National Energy Regulator of South Africa recently announcing an 18.65% tariff hike scheduled for April 2023, more consumers are looking for ways to get off the grid and look for alternative power supplies.

Is it possible to explore pension-backed home loans to fund the inclusion of solar panels on their roofs as part of renovations to their home?

Some retirement funds offer pension-backed home loans to qualifying members who plan to use it for a primary residence. As a member, you can get access to a portion of your accumulated savings as a loan towards buying property or land, or to pay for transfer and bond registration costs. A pension-backed home loan can also help existing home owners who want to make improvements to their property to increase its value. The loan has to be paid back over an agreed period.

“A retirement fund is a benefit that is available to many employees across the country and Momentum Corporate is always looking for a way to help our members understand ways in which they can use their benefits to better their lives now, however we would encourage them to reach out to their retirement benefit counsellors to receive advise,” says Ncumisa Madinda, executive for Member solutions at Momentum Corporate.

“We also encourage members who want to go off the grid or have hybrid systems in their homes to make sure they speak to an expert about the correct solution for their household needs.”

Some of the advantages of a pension-backed home loan are:

No bond registration costs
Low initiation and monthly fees
Favourable interest rates
Instalments deducted directly from the member’s salary, with no debit order fees
Low risk of defaulting on the loan, as long as you’re employed and earning a salary

To qualify for a pension-backed home loan, members will have to go through the usual bank approval process, with the same requirements for supporting documentation.

Madinda says members that many retirement funds have benefit counselling services to help you understand the pension-backed home loan benefits you have with your retirement fund.

ENDS