Bond - Extra payments

WollieVerstege said:
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.
Click to expand...

kak
 
zerocool2009 said:
I would love to hear the reason for that one !
Click to expand...
I think it's because you basically have a massive revolving loan linked to an asset. Its a problem that you can just draw money from this without them reevaluating the asset.

So you can still get a bond where you can pay them off faster and you can still borrow from this loan based on how much you have paid off but they have added in a process to prevent people from doing this automatically.

It's safer for the customer as well.
 
Nerfherder said:
I think it's because you basically have a massive revolving loan linked to an asset. Its a problem that you can just draw money from this without them reevaluating the asset.

So you can still get a bond where you can pay them off faster and you can still borrow from this loan based on how much you have paid off but they have added in a process to prevent people from doing this automatically.

It's safer for the customer as well.
Click to expand...

If the bank see's you as ANY risk ... they wont even grant you a loan for a bond (that I know)
 
WollieVerstege said:
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.
Click to expand...
Just elaborate a bit more on this please. I am not aware of this and I can't seem to find out mathematically why this would make a difference, so I am probably missing something?
 
WollieVerstege said:
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.
Click to expand...

how about four payments of R250?
 
WollieVerstege said:
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.
Click to expand...
Rubbish
 
WollieVerstege said:
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.
Click to expand...
You don't specifically split the payments. It just best to always put as much money in as soon as you get it. In a perfect world, if you were paid on the 25th and your bond payment was on the 25th then it's best to just do 1 payment (as much as you can). You shouldn't do half payments and then wait 2 weeks to do the remainder.

Taking it an extra step to save a couple rand, if you were paid on the 15th and have a debit order coming off on the 1st then you could put all the money into the bond, and on the 30/31st you do a scheduled payment to put the debit order amount from the bond into your cheque account (which then just goes back into the bond). That way you have an extra 6 days of money not being charged negative interest.
 
WollieVerstege said:
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.
Click to expand...

I would love to hear who advices this!!! A nice Friday joke
 
zerocool2009 said:
I would love to hear who advices this!!! A nice Friday joke
Click to expand...
mybb.jpg


I think this is what he is trying to say...

Imagine payments are represented by the Red dots on a timeline of length = 1 calendar month.

In terms of interest, Month Y is better that Month X, but as you are saying: Month Z is better than Month Y.
 
TheBadMadMan said:
mybb.jpg


I think this is what he is trying to say...

Imagine payments are represented by the Red dots on a timeline of length = 1 calendar month.

In terms of interest, Month Y is better that Month X, but as you are saying: Month Z is better than Month Y.
Click to expand...

My argument is, why pay a bit when you get everything instantly back again ? (thats the power of a flexi).
 
WollieVerstege said:
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.
Click to expand...
It all depends on the timing of the R1000 payment. Most amortization tables and financial calculators (and even the excel precoded formula for this) allow you to specify if the payment is made at the begining of the period or the end the period. Set the formule to use end of the period (for the R1000 payment) then your are correct, set it up to use begining of the period ( for the R1000 payment) then you are incorrect. Basic maths.
 
Thanks all for the replies. Really helpful. Monthly it is then....

My next question. In both my bonds (one Nedbank and one Absa) I have accumulated a decent amount in the Flexi part of each of them. Do I need to call the bank to capitalize it (So it's no longer available to me) or just leave it there?
What I'm getting at is, whether or not that build up of extra money I've paid is gonna help me pay the bonds off sooner if it's available to me? Do I need to call the bank to do something with it?


Thanks
 
Nimzo-Indian said:
Thanks all for the replies. Really helpful. Monthly it is then....

My next question. In both my bonds (one Nedbank and one Absa) I have accumulated a decent amount in the Flexi part of each of them. Do I need to call the bank to capitalize it (So it's no longer available to me) or just leave it there?
What I'm getting at is, whether or not that build up of extra money I've paid is gonna help me pay the bonds off sooner if it's available to me? Do I need to call the bank to do something with it?


Thanks
Click to expand...
No need to contact the bank. Their computers calculate the interest on your outstanding balance automatically.
 
Nimzo-Indian said:
Thanks all for the replies. Really helpful. Monthly it is then....

My next question. In both my bonds (one Nedbank and one Absa) I have accumulated a decent amount in the Flexi part of each of them. Do I need to call the bank to capitalize it (So it's no longer available to me) or just leave it there?
What I'm getting at is, whether or not that build up of extra money I've paid is gonna help me pay the bonds off sooner if it's available to me? Do I need to call the bank to do something with it?


Thanks
Click to expand...
There's no penalty for having the funds available to you. I don't see any reason why one would want to tie it down through capitalization.
 
Matt91 said:
AFAIK some banks dont offer flexi bonds anymore. FNB couldn't / wouldn't offer me anything like that.
Click to expand...
That's odd. I was told all FNB bonds are flexi bonds and I use mine as such. Do a test by transferring a small amount to your bond and see if it's available under the Available Balance tab.
 
You must log in or register to reply here.
Back
Top
Sign up to the MyBroadband newsletter
X