FNB access bond and overpayments

[Speedster]

Just a word of warning, not sure who's bond you want to put this money into, but if your mother gives you the R700k to use for your own bond then there is a serious tax implication being donations tax which is levied at 20% of the donated amount. Whatever you do with the money make sure everything is done in her name otherwise you're looking at a hefty tax bill.

Good point. A simple interest free loan agreement should suffice

 

[deweyzeph]

Good point. A simple interest free loan agreement should suffice

The problem with that is that deceased estates can call back the loan and then you're in trouble if you can't pay it back.

 

[Speedster]

The problem with that is that deceased estates can call back the loan and then you're in trouble if you can't pay it back.

My understanding is that she plans to keep the funds available in the home loan. Besides, by the sounds of things she's likely to inherit at least a portion of the funds.

 

[Harmonic]

You have 1,000,000 outstanding now at 10% interest.

So R8,333 in interest every month.

Let’s say your original instalment was R10,000 so only R1668 actually goes towards paying the loan off.

Now you put in your 700k and therefore your outstanding balance is 300k.

So now interest is R2500 per month and R7500 goes towards actually paying off the capital balance.

If you really wanted to have your monthly instalment go down you can put the 700k in and ask FNB to balance the account. But now you’ll lose access to that 700k and you’ll still pay your house for 20 years at basically the same interest rate meaning you lose out over the term.

You want to pay it off faster if you want to save money, not pay it longer for less.

Don't forget about donations tax. SARS will come in dry and demand their pound of flesh.

Edit: I see someone else mentioned it already

 

[ChristelleH]

Just a word of warning, not sure who's bond you want to put this money into, but if your mother gives you the R700k to use for your own bond then there is a serious tax implication being donations tax which is levied at 20% of the donated amount. Whatever you do with the money make sure everything is done in her name otherwise you're looking at a hefty tax bill.

Thanks for this, definitely will take it into consideration.

 

[ChristelleH]

My understanding is that she plans to keep the funds available in the home loan. Besides, by the sounds of things she's likely to inherit at least a portion of the funds.

Yes you are correct on both. I want to keep it safe for her should my mother ever decide she wants to do something else with it (buy a place that fits the budget for example) - I am also the sole beneficiary of my mother's will.

 

[doubletrouble]

I have been paying extra into my FNB Flexi bond. this month I noticed my installment (debit order) was R400 less than normal. I reached out to the online chat and they said that the monthly installment will reduce as the outstanding balance is less. Is this correct? I thought the extra payment goes toward reducing the term?

 

[zerocool2009]

I have been paying extra into my FNB Flexi bond. this month I noticed my installment (debit order) was R400 less than normal. I reached out to the online chat and they said that the monthly installment will reduce as the outstanding balance is less. Is this correct? I thought the extra payment goes toward reducing the term?

The bank works out the term also. I am seeing the same, but not big chucks like you are doing.

My advice, just on keeping pumping capital into the bond (you will kill is quickly, but leave it open)

 

[doubletrouble]

The bank works out the term also. I am seeing the same, but not big chucks like you are doing.

My advice, just on keeping pumping capital into the bond (you will kill is quickly, but leave it open)

That is this the plan. Want to kill it ASAP so that I have a big chunk of years left that I can keep it open in case I want to make another purchase.

Quick question? If I decide to use the bond to purchase another property, and the term remaining on the open bond is say 10 years, does that mean that I need to pay the next property within 10 years?

 

[Snyper564]

That is this the plan. Want to kill it ASAP so that I have a big chunk of years left that I can keep it open in case I want to make another purchase.

Quick question? If I decide to use the bond to purchase another property, and the term remaining on the open bond is say 10 years, does that mean that I need to pay the next property within 10 years?

yup and unless you renegotiate terms

Mine is settled now for the last two year and I pull out as I need to for crypto trades for example then just pop it back but I would have some amount of time to settle as remaining term

 

[Snyper564]

yup and unless you renegotiate terms

Mine is settled now for the last two year and I pull out as I need to for crypto trades for example then just pop it back but I would have some amount of time to settle as remaining term

The early "settlement" resulted in savings of

+- R19k X 159 = R1.4m

 

[zerocool2009]

That is this the plan. Want to kill it ASAP so that I have a big chunk of years left that I can keep it open in case I want to make another purchase.

Quick question? If I decide to use the bond to purchase another property, and the term remaining on the open bond is say 10 years, does that mean that I need to pay the next property within 10 years?

Correct, but you can reset the term back to 20 years, or 30 years.

Been using a R1 000 000 bond to buy me 6 properties of R10 000 000 in value over the last 10 years. PM me ...

 

[deweyzeph]

I have been paying extra into my FNB Flexi bond. this month I noticed my installment (debit order) was R400 less than normal. I reached out to the online chat and they said that the monthly installment will reduce as the outstanding balance is less. Is this correct? I thought the extra payment goes toward reducing the term?

I've never seen this with my FNB flexi bond and I pay in extra most months. The only time my debit order changes is when interest rates change.

 

[zerocool2009]

I've never seen this with my FNB flexi bond and I pay in extra most months. The only time my debit order changes is when interest rates change.

Ok… try this:
Move a R1000 now out of your bond, and put it back.
You will get a bond email, and your debit order will change

 

[deweyzeph]

Ok… try this:
Move a R1000 now out of your bond, and put it back.
You will get a bond email, and your debit order will change

I've moved money in and out of my bond account all the time for almost 10 years. I've never got an email notifying my debit order will change, nor has it ever changed except for interest rate changes. Maybe I just have a different option on my flexi bond.

 

[zerocool2009]

I've moved money in and out of my bond account all the time for almost 10 years. I've never got an email notifying my debit order will change, nor has it ever changed except for interest rate changes. Maybe I just have a different option on my flexi bond.

Can be. There are 4 flexi versions currently. Each with its own rules

 

[Pegging]

I've moved money in and out of my bond account all the time for almost 10 years. I've never got an email notifying my debit order will change, nor has it ever changed except for interest rate changes. Maybe I just have a different option on my flexi bond.

I'm with FNB.

When I add or withdraw money I get a notification to say that the interest portion of the payment is changing.


The monthly payment amount only changes when the interest rate changes.

 

[deweyzeph]

Can be. There are 4 flexi versions currently. Each with its own rules

I know there is an option to manually request the capitalisation of your extra payments to reduce your monthly payments, maybe there's an option to do this automatically? In any case I prefer my debit order to remain the same regardless of how much extra I've paid in, it just brings you that much closer to paying it off quicker plus I think you also lose access to the credit if you capitalise your extra payments.

 

[Sepeng]

I've moved money in and out of my bond account all the time for almost 10 years. I've never got an email notifying my debit order will change, nor has it ever changed except for interest rate changes. Maybe I just have a different option on my flexi bond.

Yeah same.
I've said this before, we've had bonds with ABSA, Standard Bank and FNB and I find FNB's to be the messiest to be honest.
ABSA for me is the cleanest - easy to see what you take out put in, owe, have available. Plus now and then I'll check my FNB bond and it'll say available R0, next day it's back, dunno, just prefer the way ABSA make it look.

 

[DrJohnZoidberg]

I have been paying extra into my FNB Flexi bond. this month I noticed my installment (debit order) was R400 less than normal. I reached out to the online chat and they said that the monthly installment will reduce as the outstanding balance is less. Is this correct? I thought the extra payment goes toward reducing the term?

Can't say I've seen the same, at least not yet.

I've been pumping a lot more into my bond, basically any money that doesn't need to cover my debit orders go into there.