Bi-weekly bond payments

[hondaboysa]

Can someone please explain to me: I heard that paying your bond bi-weekly would decrease the number of years on your bond? Is it true and how does it work?

Thanks,

 

[hellfire]

Can someone please explain to me: I heard that paying your bond bi-weekly would decrease the number of years on your bond? Is it true and how does it work?

Thanks,

Firstly, I'll assume you mean fortnightly (every 2 weeks).
It really depends on what you mean by 'pay'.
Do you mean pay extra in addition to your instalment? If so, then this reduces your bond period as you pay down your capital amount very quickly.
If you mean pay half of the installment every 2 weeks (which translates to one full payment a month), this would reduce your bond period (albeit minimally) because slightly less interest is accrued against your outstanding amount.
I don't think any bank allows this kind of payment plan though - they want your full installment each month. Instead, you would have to pay half your installment early, wait for your main installment to deduct, and then transfer half back out of the bond (provided that you have an access facility).

 

[hondaboysa]

So paying you bond bi-weekly (which translates to one full payment a month) wouldn't make a substantial difference?

 

[hsmnel]

IF you pay halve before the 15 and then the rest by the 30th or whenever your due date is then the bank see it as the full instalment. You will save because the amount used for interest calculation is less. Check on you statement which date the bank calculate the interest and make a payment a day before.

 

[hsmnel]

What will make a bigger impact is to try and save and then start paying the full instalment before the interest calculation. If your bond payment is due by the 28 for example and interest calculation is on the 18th then pay full amount on the 15.

 

[Jehosefat]

What will make a bigger impact is to try and save and then start paying the full instalment before the interest calculation. If your bond payment is due by the 28 for example and interest calculation is on the 18th then pay full amount on the 15.

Interest is calculated daily so you should just pay the money in as soon as you can.

 

[etwylite]

This is a simple method for making additional payment every year.
Take your monthly bond amount say R10000 and divide by 2.
Then you pay R5000.00 every 2 weeks like clockwork.

Effectively with 52 weeks in the year you make 26 payments or 13 "monthly" payments thereby effectively paying 1 extra months payment per year.

with the concomitant interest and accelerated period payoff savings because you are always "ahead" of your payments.

 

[Sparkz0629]

So if you have a bond thats linked to your account (As in you see it on internet banking), and you make these extra payments, do you then have to call the bank and have them adjust the bond at all?

Or will the mere transfer mean that there is less interest?

 

[AlmightyBender]

Yes it is true, you can arrange with your bank to set this up I believe

 

[etwylite]

So if you have a bond thats linked to your account (As in you see it on internet banking), and you make these extra payments, do you then have to call the bank and have them adjust the bond at all?

Or will the mere transfer mean that there is less interest?

There is nothing to adjust. You are in effect ahead of your repayment schedule from your first payment.

 

[hj2k_x]

Has anyone actually set this up with their bank?

Wondering if it's easy to do...

 

[hellfire]

Has anyone actually set this up with their bank?

Wondering if it's easy to do...

Set what up, exactly?

 

[hj2k_x]

Set what up, exactly?

Payments twice a month

 

[HavocXphere]

Payments twice a month

Surely you can just set up a scheduled EFT/transfer to the bond account?

If your fees aren't flat rated then you might lose out on bank charges though.

 

[hj2k_x]

Surely you can just set up a scheduled EFT/transfer to the bond account?

If your fees aren't flat rated then you might lose out on bank charges though.

I guess a along as the monthly amount is paid by the due date each month, they don't care how it gets there...

 

[hellfire]

I guess a along as the monthly amount is paid by the due date each month, they don't care how it gets there...

But they do, if you've signed a debit order. That will come off regardless of how much you've deposited manually that month

 

[hj2k_x]

But they do, if you've signed a debit order. That will come off regardless of how much you've deposited manually that month

Ya that's why I was asking if anyone has actually got this right.

 

[Ou grote]

Payments twice a month

It's not twice a month, it's every 2nd week as etwylite explained.

 

[hj2k_x]

It's not twice a month, it's every 2nd week as etwylite explained.

Well has anyone got that right then?

 

[HavocXphere]

The details don't really matter...it boils down to "take a part of payment and move it forward".