Homeloan Question

Recallza

Recallza

Senior Member
Joined
Jun 22, 2018
Messages
554
Reaction score
150
Location
Johannesburg
Hi Guys,

I'm uncertain which way forward is the best way, perhaps some of you can give your opinions..

I have extra money monthly, and I'm unsure whether to incraese my bond debit order amount, or to pay the extra money monthly into the flexibond?

I have a fair amount in my flexibond already, as far as I've understood it, by increase debit order, the money will go off towards paying off the bond, if I were to pay the money into the flexibond, it'll cut down the interest monthly, which in turn will increase the money going into the bond.

Any advice would be much appreciated
 
Yeah I'm confused - you've got a set amount to pay every month, anything extra you pay in will add to your flexibond amount won't it? I'm not even sure how to pay money into your flexibond, it's not like a separate account, is it?
 
Sepeng said:
Yeah I'm confused - you've got a set amount to pay every month, anything extra you pay in will add to your flexibond amount won't it? I'm not even sure how to pay money into your flexibond, it's not like a separate account, is it?
Click to expand...

It's a seperate account.. I'm with FNB and I can transfer funds from one account to my homeloan account and vice versa.. That is how the flexi option works.. by increasing my debit order, the extra amount gets paid straight to the bank, which in turn decreases the amount owing to the bank, flexi doesn't decrease the amount owing to the bank, but it does decrease the interest I pay monthly.
 
Recallza said:
It's a seperate account.. I'm with FNB and I can transfer funds from one account to my homeloan account and vice versa.. That is how the flexi option works.. by increasing my debit order, the extra amount gets paid straight to the bank, which in turn decreases the amount owing to the bank, flexi doesn't decrease the amount owing to the bank, but it does decrease the interest I pay monthly.
Click to expand...
Pay it into the flexibond. It means you will still pay for example R10k a month but there will also be less interest in this portion. It will aid in paying your bond off quicker and you will also easily have access to this money if needed. Remember you pay interest on the daily outstanding balance. I dump every additional cent I have into my flexibond and every month notice a massive difference, this can knock years off your repayments.

If you have a flexibond and you are not using it you are losing out.
 
Odd, for my Nedbank home loan the two are the same. If I increase my debit order or pay it in manually it is effectively the same net effect. Its just available cash in the bond saving me interest monthly.
 
Cius said:
Odd, for my Nedbank home loan the two are the same. If I increase my debit order or pay it in manually it is effectively the same net effect. Its just available cash in the bond saving me interest monthly.
Click to expand...
Correct, BUT, its not that easy to get access to that additional if you need it. I would rather dump R100k in and have access to it at a moments notice then need to reapply for it and wait days/weeks/months?
 
Cius said:
Odd, for my Nedbank home loan the two are the same. If I increase my debit order or pay it in manually it is effectively the same net effect. Its just available cash in the bond saving me interest monthly.
Click to expand...

Yeah this. The flexibond portion is simply the extra bit you've paid into your bond, which you can transfer from. Least that's how I always thought it worked. You live and you learn. Still very confused though.
 
in some cases they calculate the interest on the capitalised amount only, not on the account balance, ask your bank.
 
Snyper564 said:
Correct, BUT, its not that easy to get access to that additional if you need it. I would rather dump R100k in and have access to it at a moments notice then need to reapply for it and wait days/weeks/months?
Click to expand...
I have instant access to the whole amount. So over the years I have paid additional money into my bond. Sometimes it is manually transferred in via my internet banking. Some of it was via the bigger debit order. However that money reaches my bond it all falls under "Available funds for transfer". Each month if I don't put in extra money that amount goes down slightly as the bond gets more paid off but the vast majority is available for instant transfer via my internet banking. Never had to "Apply" for my own extra funds stored in my bond. Perhaps that is just Nedbank though. I have heard of the other banks making it a lot harder to get additional funds out.

Currently I am deciding whether to close the bond or not. I have a lot of my liquid wealth tied up in the bond that I could use to emigrate if everything hits the fan. Hence I am keeping the bond open for now. If things go well post election I may consider closing it as there is a monthly account fee I would save if I did close it. Interest is minimal as I keep the balance of the bond at close to zero.
 
Recallza said:
It's a seperate account.. I'm with FNB and I can transfer funds from one account to my homeloan account and vice versa.. That is how the flexi option works.. by increasing my debit order, the extra amount gets paid straight to the bank, which in turn decreases the amount owing to the bank, flexi doesn't decrease the amount owing to the bank, but it does decrease the interest I pay monthly.
Click to expand...
There's no point in having a flexi bond in a separate account. The hole idea of a flexi bond is to minimise the outstanding balance on your bond with which the interest gets calculated.(interest is always calculated on how much you still owe, day by day. it can be the bond amount, minus the flexi amount) You should check with your bank that they do this properly.

If it is just a funny way to give you access to the money by having a "separate" account but the interest calculate correctly then put the extra money in there.
 
rietrot said:
There's no point in having a flexi bond in a separate account. The hole idea of a flexi bond is to minimise the outstanding balance on your bond with which the interest gets calculated.(interest is always calculated on how much you still owe, day by day. it can be the bond amount, minus the flexi amount) You should check with your bank that they do this properly.

If it is just a funny way to give you access to the money by having a "separate" account but the interest calculate correctly then put the extra money in there.
Click to expand...

Yeah ofcourse, perhaps the way I explained it in words came across that way..
 
Recallza said:
It's a seperate account.. I'm with FNB and I can transfer funds from one account to my homeloan account and vice versa.. That is how the flexi option works.. by increasing my debit order, the extra amount gets paid straight to the bank, which in turn decreases the amount owing to the bank, flexi doesn't decrease the amount owing to the bank, but it does decrease the interest I pay monthly.
Click to expand...

That sounds very wrong (and isn't the way my flexibond worked).

Also it shouldn't matter whether you increase the debit order or pay it in yourself, result should be the same. Only downside to increasing the debit order is that it isn't optional. I've just set up a recurring payment from my normal account into my bond for each month. That way I can cancel it if I have extra expenses in a certain month without going through the whole process of changing the debit order amount.
 
Jehosefat said:
That sounds very wrong (and isn't the way my flexibond worked).

Also it shouldn't matter whether you increase the debit order or pay it in yourself, result should be the same. Only downside to increasing the debit order is that it isn't optional. I've just set up a recurring payment from my normal account into my bond for each month. That way I can cancel it if I have extra expenses in a certain month without going through the whole process of changing the debit order amount.
Click to expand...

I must have it wrong then, and the additional debit order goes to my flexi.. Will see when my debit order comes off this month..

I thought the full debit order brings down years/months, but paying into the flexibond doesn't bring down the years/months?
 
What do your home loan statements say? Does an additional payment drop the account balance exactly as expected? If so, you're saving interest on the payments as the interest is charged on the outstanding balance.
 
3WA said:
What do your home loan statements say? Does an additional payment drop the account balance exactly as expected? If so, you're saving interest on the payments as the interest is charged on the outstanding balance.
Click to expand...

Now that I think about it, it makes sense that that additional amount on the debit order goes to flexi, just never seen it.. Will keep a look out after next debit run.

The entire debit order (incl additional payment) decreases the account balance monthly.
 
Recallza said:
Now that I think about it, it makes sense that that additional amount on the debit order goes to flexi, just never seen it.. Will keep a look out after next debit run.

The entire debit order (incl additional payment) decreases the account balance monthly.
Click to expand...

When you prepay your bond (FNB specific now), there are a few flexi bond versions actually, all with different rules.

If you repay, you save on interest (not in time). If you have paid your bond off, and still have time left, ask FNB to align the debit order (take note, they will lock you prepaid fund in, and you need to apply to get that unlocked again).

It is very scary that you only now realize how your extra funds are allocated. I worked with someone who asked after 4 years, what is this R505 debit order for ( L O L ).
 
My homeloan statement is useless. It tries to reduce the payment to keep to the 20 year term where I rather view the extra payments as a way to reduce term.
 
Cius said:
My homeloan statement is useless. It tries to reduce the payment to keep to the 20 year term where I rather view the extra payments as a way to reduce term.
Click to expand...

Let me confuse you some more (if you are with FNB), after a debit order went off, a capital amount clears after 7 days, which you can borrow against !

Use BONDS wisely ! (and smartly)
 
You must log in or register to reply here.
Back
Top
Sign up to the MyBroadband newsletter
X