Bond - Extra payments

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Nimzo-Indian

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Hi All
Just a quick question.
I understand the benefit of making extra payments into your bond every month so that you can settle your bond earlier and save tons on interest (Depending on amount).

My question is:
Is paying R1000 extra in your bond every month the same as paying an extra R12000 into your bond once a year? Something tells me that it isn't the same and that the monthly extra contribution is better.


Thanks
 
Nimzo-Indian said:
Hi All
Just a quick question.
I understand the benefit of making extra payments into your bond every month so that you can settle your bond earlier and save tons on interest (Depending on amount).

My question is:
Is paying R1000 extra in your bond every month the same as paying an extra R12000 into your bond once a year? Something tells me that it isn't the same and that the monthly extra contribution is better.


Thanks
Click to expand...

It isnt the same

Interest is calculated per day and charged per month

See it the same as compounding interest
 
Nimzo-Indian said:
Hi All
Just a quick question.
I understand the benefit of making extra payments into your bond every month so that you can settle your bond earlier and save tons on interest (Depending on amount).

My question is:
Is paying R1000 extra in your bond every month the same as paying an extra R12000 into your bond once a year? Something tells me that it isn't the same and that the monthly extra contribution is better.


Thanks
Click to expand...

Hey man, have a look at this site, really helpful to see how it affects payments

www.fnb.co.za

Bond Calculator

This calculator can help you determine the monthly repayments based on the Home Loan amount, chosen term and more.
www.fnb.co.za
 
Hypothetically, if someone gets a R12k bonus every December. Would it not be better to put the whole thing into the bond every year? Rather than putting splitting it into R1k a month?
 
Midnights_Ghost said:
Hypothetically, if someone gets a R12k bonus every December. Would it not be better to put the whole thing into the bond every year? Rather than putting splitting it into R1k a month?
Click to expand...

If you've got the money NOW, then it's better to put the whole R12k in now. If you're saving R1000 every month to get to the R12k, then it's better to pay in R1k every month, instead of waiting till you've saved R12k and then putting it in.
 
WollieVerstege said:
Better still is to pay R500 at the beginning of the month and another R500 half way through.
Click to expand...

If you have R1000 it makes no sense to split it up into 2 payments of R500. Interest is calculated daily, so if you pay R1000 at the beginning of the month you will pay less interest than if you split the payments.
 
deweyzeph said:
If you have R1000 it makes no sense to split it up into 2 payments of R500. Interest is calculated daily, so if you pay R1000 at the beginning of the month you will pay less interest than if you split the payments.
Click to expand...
This has been calculated many times over. You save more on interest by making 2 payments of R500 than 1 payment of R1000 every month. It may seem strange but it is true. You can easily do an amortization table that will show you the difference.
It is even advised by many financial experts.
 
All my accounts are zero I basically use bond as a savings account. Knocked 10 +years and 100000s+ off bond
 
zerocool2009 said:
How about put all you can in your bond(s), living on your credit card, earning rewards, and paying it in full when the due date comes
Click to expand...
Actually know a woman who did this. Her salary went directly into her bond on the 15 and she only took out what was required for debit orders and other payments on the 1st. Seems to have worked for her.
 
WollieVerstege said:
Actually know a woman who did this. Her salary went directly into her bond on the 15 and she only took out what was required for debit orders and other payments on the 1st. Seems to have worked for her.
Click to expand...

Its pure magic! If you dont know the power of a flexi bond... (ag nee, its so easy).
 
AFAIK some banks dont offer flexi bonds anymore. FNB couldn't / wouldn't offer me anything like that.
 
deweyzeph said:
If you have R1000 it makes no sense to split it up into 2 payments of R500. Interest is calculated daily, so if you pay R1000 at the beginning of the month you will pay less interest than if you split the payments.
Click to expand...

I will accept the interest amount is added daily, but the actual amount is calculated according to eulars number is it not?
 
Midnights_Ghost said:
Hypothetically, if someone gets a R12k bonus every December. Would it not be better to put the whole thing into the bond every year? Rather than putting splitting it into R1k a month?
Click to expand...
AS a rule its just always better to pay on to the bond as soon as you have that money available.

So if you get a bonus then put it on your bond (assuming no other debt)
If you have 1k spare in your budget every month then put it straight on your bond.
It even makes a difference what day you put it on the bond. The interest is calculated every month on a certain day so its important to transfer money (if you have spare) on to the bond before the interest is calculated for the month.
 
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