Bond value

ABCpt

ABCpt

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I have an argument with a bank at the moment regarding an additional loan.
Lets say for argument's sake I have a bond of R1 000 000.
Of this I've paid off R 100 000. I now need R200 000 for solar installation.
I requested R200 000, which they granted, the total bond amount is now R 1 200 000.
However, they are using the full R1.2 mil to calculate the new installment, ignoring the R100 000 I've paid already. I'm also not getting the R100 000, as I need to reapply for this. In my mind I'm then paying twice for the R100 000.
Am I missing something?
 
Remember, your bond registration was for R1 000 000 (the example). If you prepay the bond, you can take that now out and spend it as you like. The bank isnt concerned about what you have prepaid (my view).

If you extend the bond, its bond registration fees again (just keep that in mind).

If you tell the bank, to BANK the R100 000 prepaid amount, then you wont have access to it, then they will recalculate it
 
ABCpt said:
In my mind I'm then paying twice for the R100 000.
Am I missing something?
Click to expand...

I guess the instalment is calculated on the new bond value, not on the remaining balance.

So your term is now going to be shorter because you're effectively being forced to save an extra amount into your bond, reducing the principal faster.
 
ABCpt said:
I have an argument with a bank at the moment regarding an additional loan.
Lets say for argument's sake I have a bond of R1 000 000.
Of this I've paid off R 100 000. I now need R200 000 for solar installation.
I requested R200 000, which they granted, the total bond amount is now R 1 200 000.
However, they are using the full R1.2 mil to calculate the new installment, ignoring the R100 000 I've paid already. I'm also not getting the R100 000, as I need to reapply for this. In my mind I'm then paying twice for the R100 000.
Am I missing something?
Click to expand...

Did you pay in R100k extra or did you just pay R100k of interest?
 
The_MAC said:
Indeed.

Wouldn't only say R10-R20k of the R100k be considered payment towards the capital, and the rest would be interest?
Click to expand...

OP needs to clarify when he says "paid off R 100 000" whether he means the capital balance was down to R 900k, or if he'd paid R 100k in instalments (capital value outstanding still ~R985k)
 
Last edited:
More info needed for us to answer/guide you.
What is the make-up of the R100k paid?

10 monthly installments of R10k, or R100k cash that you paid additional to your monthly installment.

If the R100k paid was installments then you will have just over R200k to be drawn down from your HL for the solar.
If the R100k was paid over and above your monthly installment, then technically it should be available depending on your HL structure (flexi bond)
 
ABCpt said:
I have an argument with a bank at the moment regarding an additional loan.
Lets say for argument's sake I have a bond of R1 000 000.
Of this I've paid off R 100 000. I now need R200 000 for solar installation.
I requested R200 000, which they granted, the total bond amount is now R 1 200 000.
However, they are using the full R1.2 mil to calculate the new installment, ignoring the R100 000 I've paid already. I'm also not getting the R100 000, as I need to reapply for this. In my mind I'm then paying twice for the R100 000.
Am I missing something?
Click to expand...
Bank is right.

Ironically for the first 11 years of your bond you are just paying interest, only after that do you actually start to pay off the capital.

For the R100k if you had an access bond you could withdraw it or get a readvance. However 200 is either an extension of your existing one or a secondary bond.

Some pensions also allows you a pension backed loan at a reduce rate.
 
Tomtomtom said:
OP needs to clarify when he says "paid off R 100 000" whether he means the capital balance was down to R 900k, or if he'd paid R 100k in instalments (capital value outstanding still ~R985k)
Click to expand...
It is capital paid off. They say in this case I should do a readvance. My mistake for thinking that their system would be able to pick up the difference.
 
ABCpt said:
It is capital paid off. They say in this case I should do a readvance. My mistake for thinking that their system would be able to pick up the difference.
Click to expand...

Ok, and now is your capital balance R 1.2 million or R 1.1 million?

If it's R 1.1 million then your term will be correspondingly shorter. Get an amortisation schedule and take a look. Accelerating your repayment is not necessarily a bad thing assuming you can afford it.
 
Corelli said:
Bank is right.

Ironically for the first 11 years of your bond you are just paying interest, only after that do you actually start to pay off the capital.

For the R100k if you had an access bond you could withdraw it or get a readvance. However 200 is either an extension of your existing one or a secondary bond.

Some pensions also allows you a pension backed loan at a reduce rate.
Click to expand...
Tell me about it, we are only now seeing serious dents in our bond capital after 10/11 years. Interest is still a big part but the cap portion is better. Also trickle a little extra over years monthly has helped too, even if its just R300 here, R500 there each month.
 
Tomtomtom said:
Ok, and now is your capital balance R 1.2 million or R 1.1 million?

If it's R 1.1 million then your term will be correspondingly shorter. Get an amortisation schedule and take a look. Accelerating your repayment is not necessarily a bad thing assuming you can afford it.
Click to expand...
or they signed a new bond at lower interest and reset the clock.....

I once though about getting a lower interest rate with a new bank which many were happy to offer until I said I wanted to keep it from the new balance. Lot interest quickly. Happy to give concession if taking the loan at the "normal" rate".

Op, keep in mind, you would have possibly incurred additional bond legal fees as well as the updated bond would need registration.
 
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