Access Bonds: FNB Flexi Option vs Nedbank Revolve

[geekso]

Hi Everyone,

I just purchased a new property and i have approval from the above two banks above. I have previously financed with SA Home Loans and i have never had a flexi bond before so i am trying to understand how does this work.

1. Do i have 100% access to lump sum deposits?
2. Do i have access to anything i pay over and above my normal repayment?
3. Does the capital portion of the payments become available once paid?
4. Does the home loan monthly repayment adjust accordingly based on the outstanding amount or do they reduce the term?
5. If the term is adjusted, what happens once i withdraw the access funds i have deposited into the loan?
6. What would be the best way to structure this?

If anyone has these bonds with these banks your help would be appreciated.

Thanks

 

[kanzen]

My FNB Flexi allows for instant access to additional funds including the monthly repayment, minus the interest, once the debit order goes off. However, it takes a few days to become accessible again, usually around the 7th of the next month after the debit order has been deducted.

 

[rodga]

Subbed

 

[geekso]

Thanks for the reply, how old is your bond though? I read up but it seems like they changed the rules so thats why the confusion.

Old customers are allowed to take the capital amount but new clients reads that only funds paid over your monthly repayment?

can you confirm this?

 

[kanzen]

Thanks for the reply, how old is your bond though? I read up but it seems like they changed the rules so thats why the confusion.

Old customers are allowed to take the capital amount but new clients reads that only funds paid over your monthly repayment?

can you confirm this?

My bond was registered in May of this year so it's the latest rules.

 

[geekso]

Thanks for the feedback, so what happens when you pay additional funds into your bond?
Does your monthly repayment reduce or does the term of the loan reduce?
The consultant told me the term reduces but then I am wondering what happens if the funds are withdrawn, does the term revert back to original?

 

[kanzen]

Thanks for the feedback, so what happens when you pay additional funds into your bond?
Does your monthly repayment reduce or does the term of the loan reduce?
The consultant told me the term reduces but then I am wondering what happens if the funds are withdrawn, does the term revert back to original?

I've basically paid extra to cover the initiation fee for the bond and the repayment has stayed the same. I'd think if you borrow anything more than the extra amount you've put in it will increase the premium.

 

[SauRoNZA]

By default the repayment would stay the same and the interest generated would be lower because it's calculated on the capital balance that has been offset by the overpaid amounts.

Unless you ask for the repayments to be recalculated in which case you will lose access to the excess amounts overpaid as capital balance will be permanently reduced instead of "dynamically" as per the Flexi bond.

The balance is the Capital Amount MINUS the "available" amount. So on FNB the left column is what you own minus the right column.

On Nedbank I don't remember exactly what it looked like on Internet Banking but I did get a nasty surprise thinking the balance was the actual balance and the excess would still be subtracted from it, meanwhile it happens "virtually" in the background.

 

[SauRoNZA]

I've basically paid extra to cover the initiation fee for the bond and the repayment has stayed the same. I'd think if you borrow anything more than the extra amount you've put in it will increase the premium.

Usually you can't just borrow more than is there already, it's not a credit facility (beyond the original loan). You need to make a special application for to extend the bond.

 

[SauRoNZA]

Thanks for the feedback, so what happens when you pay additional funds into your bond?
Does your monthly repayment reduce or does the term of the loan reduce?
The consultant told me the term reduces but then I am wondering what happens if the funds are withdrawn, does the term revert back to original?

The term indirectly reduces through the interest reducing.

Interest is calculated daily so if the funds are withdrawn then the interest increases again and in doing so the loan term extends again.

Which is why it's a good idea to for instance dump your entire cheque account balance into you home loan for the month and use your credit card interest free and then pay it off end of the month.

The longer you keep more money in the bond account the lower the interest will be, even if you just rotate the balance of you cheque account monthly.

If you interest rate is Prime and you have 10k sitting in there then you save R87.50 every month, which if nothing else covers some of your fees.

The higher this goes the more you save, but you don't really see it happening.

 

[kanzen]

Usually you can't just borrow more than is there already, it's not a credit facility (beyond the original loan). You need to make a special application for to extend the bond.

I think you've misunderstood what I was trying to say. It will never be more than the original bond amount, but it's definitely available to me for transfer any time as long as the available amount is more than R0. The available amount increases after each debit order.

 

[reactor_sa]

Hi Everyone,

I just purchased a new property and i have approval from the above two banks above. I have previously financed with SA Home Loans and i have never had a flexi bond before so i am trying to understand how does this work.

1. Do i have 100% access to lump sum deposits?
2. Do i have access to anything i pay over and above my normal repayment?
3. Does the capital portion of the payments become available once paid?
4. Does the home loan monthly repayment adjust accordingly based on the outstanding amount or do they reduce the term?
5. If the term is adjusted, what happens once i withdraw the access funds i have deposited into the loan?
6. What would be the best way to structure this?

If anyone has these bonds with these banks your help would be appreciated.

Thanks

Nedbank revolve

1. Yes, you can access additional payments but not the scheduled amount. You still need to pay the monthly minimum repayment which you cannot then access.
2. Yes, the idea is that you complete the initial payment schedule and conclude the bond after the original period.
3. No.
4. Yes, the normal is to adjust based on outstanding balance, I think if you have a fixed payment (not linked to interest rate adjustments) then the payment will obviously stay the same. Note fixed payments will increase when the interest rate increases so the bond term doesn't extend, but won't decrease when the interest rate deceases.
5. Not sure how adjusting term works, reduce or extend the term? I don't know if it is possible.
6. What's there to structure? Access bonds just mean you can make additional payments above the original schedule and access these additional payments when required.

 

[SauRoNZA]

I think you've misunderstood what I was trying to say. It will never be more than the original bond amount, but it's definitely available to me for transfer any time as long as the available amount is more than R0. The available amount increases after each debit order.

Yes.

I didn't understand it as drawing from the available amount but rather going beyond it like an overdraft of sorts.

 

[geekso]

Thanks everyone for the feedback, we have moved forward with FNB