Home loan debit order increase after withdrawal

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s1ckle

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Apr 16, 2012
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I was paying R3,674 monthly debit order for my home loan.

I had been paying extra into my account over the years, so last month I withdrew the credit amount of R25,000. I only withdrew the credit amount ie. not putting my home loan into the red.

The monthly debit order amount went up to R3,892. My question is why did the debit order go up at all?

The original debit order amount never went down over time because I was paying in extra, but now they penalise me because I took out the extra money I put in. Why is that?

Any explanation would be appreciated thank you
 
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oober

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s1ckle said:
I was paying R3,674 monthly debit order for my home loan.

I had been paying extra into my account over the years, so last month I withdrew the credit amount of R25,000. I only withdrew the credit amount ie. not putting my home loan into the red.

The monthly debit order amount went up to R3,892. My question is why did the debit order go up at all?

The original debit order amount never went down over time because I was paying in extra, but now they penalise me because I took out the extra money I put in. Why is that?

Any explanation would be appreciated thank you
Click to expand...

Your credit amount was saving you R218 in interest per month. Also do you have a fixed interest loan? Linked to prime? This all will affect the payment value.
 
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Kosmik

Kosmik

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oober said:
Your credit amount was saving you R218 in interest per month. Also do you have a fixed interest? Linked to prime? This all will affect the payment value.
Click to expand...

His debit order never changed though, so yes he would be paying less interest over the long term and having a bigger impact on his capital. Query with your bank, I used to do the same and my debit amount never changed, it only ever changed with the interest rates. Are you sure the change is not due to the recent interest rate hikes and it's just appearing to be linked to your withdrawal?
 
supersunbird

supersunbird

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s1ckle said:
I was paying R3,674 monthly debit order for my home loan.

I had been paying extra into my account over the years, so last month I withdrew the credit amount of R25,000. I only withdrew the credit amount ie. not putting my home loan into the red.

The monthly debit order amount went up to R3,892. My question is why did the debit order go up at all?

The original debit order amount never went down over time because I was paying in extra, but now they penalise me because I took out the extra money I put in. Why is that?

Any explanation would be appreciated thank you
Click to expand...

So the increase is definitely not due to the interest rate hike of 0.5 basis points?

Or if with SA Home Loans, its the Jibar rate which only might change every 3 months and could even have increased more than 0.5 basis points
 
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Sparkz0629

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Dont forget there was an increase in interest rates not too long ago. Could be from that?
 
Ho3n3r

Ho3n3r

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All of the above. My home loan was 6.3k at one stage, it's just under 6.9k now. Will probably be 7 exactly next month.
 
Pho3nix

Pho3nix

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Ho3n3r said:
All of the above. My home loan was 6.3k at one stage, it's just under 6.9k now. Will probably be 7 exactly next month.
Click to expand...

Eish
The people that bought at the top of their affordability must be crying..
 
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s1ckle

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Apr 16, 2012
Messages
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I'm pretty sure it's not due to the interest rate, check these screen prints of the comms I got from Absa. Seem's it's because I withdrew the money. So far I think oober's explanation makes sense. I might need to go into the branch to have this explained to me. The call centre lady I spoke to used many words to not say much at all.
 

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Grubscrew

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Most banks if you didn't have a flexi option originally on your bond and applied for it to withdraw the extra funds, will rerate you with regards to the interest rate on the bond.
 
Kosmik

Kosmik

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Ho3n3r said:
All of the above. My home loan was 6.3k at one stage, it's just under 6.9k now. Will probably be 7 exactly next month.
Click to expand...

Wish my bond was R7k :( I took a knife to my finances this year and stripped everything but barebones to get it inline for these increases, good thing I did, bond is nearly a grand up now.
 
Devinity

Devinity

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If the increase in your debit order is not due to interest rates then I can only think the following example would apply:

Say your home loan period is 20 years. You have been paying an extra R500 each month for the past 4 years which reduces first the interest charged and then the capital.

You then take out the reserved funds which means you are pushing the amount owing to more. You now have 16 years to pay off a 20 year loan. In order for you to meet the repayment deadline, your monthly debit order will be increased.
 
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