Bond - Extra payments

[Sinbad]

Double your payment per month, you will save 10 years

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[zerocool2009]

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I recall I started with R500 more, then a R1000. Then my salary... then full (as in totally)

If I recall now, 6.3 years for my bond!

Best investment ever

 

[Speedster]

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Correct. Doubling your payment on a 240 month loan at prime reduces the period to 82 months.

 

[phoneJunky]

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

This is the best case scenario if you have all that options available to you in terms of saving with your extra payments to the bond.

 

[diapason]

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.

Many AMERICAN experts advise this because it makes sense within their context. Many people in the USA are paid bi-monthly or fortnightly so the advice there is to pay half the repayment each payday rather than waiting until the end of the month. They go further in advising that those who are paid fortnightly keep up those half repayments with paydays 25 and 26 each year thus making an extra repayment each year.

 

[diapason]

I will accept the interest amount is added daily, but the actual amount is calculated according to eulars number is it not?

The interest is CALCULATED on the daily balance but added monthly.

 

[saturnz]

The interest is CALCULATED on the daily balance but added monthly.

yes I see now

 

[petum]

Whats better to do? Pay off or invest?

Remaining bond of R500k at prime less 1.9%

Savings of R500k..

 

[rsa-ace]

Whats better to do? Pay off or invest?

Remaining bond of R500k at prime less 1.9%

Savings of R500k..

Never fully pay it off. You could pay R499k and just leave the 1k for the remainder of the loan. That way you always have access to money.

 

[zerocool2009]

Whats better to do? Pay off or invest?

Remaining bond of R500k at prime less 1.9%

Savings of R500k..

I have a bond at R0 balance for the last 10 years. I only pay the admin fee. Its not dormant either. Why kill a bond, if you can re-use them. You paid alot of admin to get the facility. If it expires near the 20 or 30 years, just reset the period, take your prepaid amounts out first.

 

[Matt91]

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.

I've tried that a few times before once my money goes in there its gone, I mean I don't mind for me that's probably better since I have low impulse control, but I definitely can't access money that's been paid into my bond. :S

 

[zerocool2009]

I've tried that a few times before once my money goes in there its gone, I mean I don't mind for me that's probably better since I have low impulse control, but I definitely can't access money that's been paid into my bond. :S

Not all bonds are flexi’s. Its a setting on the account on fnb’s side.

Do you see a balance and available side?
So eft R5 to the bond, and do another eft (can you select the bond as the “transferring from account”?

 

[TheJman]

Whats better to do? Pay off or invest?

Remaining bond of R500k at prime less 1.9%

Savings of R500k..

It's the age old debate - the question is always - can you get a better return investing than what you are paying - i.e better that 5.1%.

If you know what you're doing - there is a chance you could.

My two cents worth - the rates are really low - which means the interest portion of your loan has come down, so any additional funds you put into your bond will pay off more capital. Think of it like a rolling snowball - the more you pay in each month, the less next month is, and it gathers pace quickly.

I am personally trying to smash that debt down to R0 as quickly as possible - if you just work out what the admin fee of R69pm is for 20 years - I would personally rather be debt free. But completely understand the other side of the debate

Edit rate - @jsheed_sa thanks for picking up the mistake

 

[Pineapple Smurf]

i have always paid in extra each month on my bond. Next month it will be 10 years of paying, i have roughly 3 years to go, nice to see how the interest each month has dropped, it's under 800 bux a month
So paying in a little extra each month makes a big difference in the end

 

[petum]

It's the age old debate - the question is always - can you get a better return investing than what you are paying - i.e better that 5.9%.

If you know what you're doing - there is a chance you could.

My two cents worth - the rates are really low - which means the interest portion of your loan has come down, so any additional funds you put into your bond will pay off more capital. Think of it like a rolling snowball - the more you pay in each month, the less next month is, and it gathers pace quickly.

I am personally trying to smash that debt down to R0 as quickly as possible - if you just work out what the admin fee of R69pm is for 20 years - I would personally rather be debt free. But completely understand the other side of the debate

As you say.. There is a chance...

Thanks. Going to smash it.

R0

 

[shadow_man]

It's the age old debate - the question is always - can you get a better return investing than what you are paying - i.e better that 5.9%.

If you know what you're doing - there is a chance you could.

My two cents worth - the rates are really low - which means the interest portion of your loan has come down, so any additional funds you put into your bond will pay off more capital. Think of it like a rolling snowball - the more you pay in each month, the less next month is, and it gathers pace quickly.

I am personally trying to smash that debt down to R0 as quickly as possible - if you just work out what the admin fee of R69pm is for 20 years - I would personally rather be debt free. But completely understand the other side of the debate

Prime -1.9% is 5.1% not 5.9%...

Prime is 7% currently.

 

[pinball wizard]

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.

Correct. FNB only offer a bond product such as you describe - as in they only have the one product.

 

[pinball wizard]

Correct. Doubling your payment on a 240 month loan at prime reduces the period to 82 months.

Yup. We pay 2.5 x bond repayment every month. Plus we throw bonuses and the like in there.

 

[pinball wizard]

AFAIK some banks dont offer flexi bonds anymore. FNB couldn't / wouldn't offer me anything like that.

When was this? FNB doesn't have a bond without the access option.

 

[Not_original]

Better still is to pay R500 at the beginning of the month and another R500 half way through.

the longer you wait the worse it gets (although at the extra payment level it will barely be noticeable). The earlier you can smash down a lump of cash lower you capital, the better. I