Is paying your bond quickly a good idea?

curds said:
Mmmh I did not know I had to pay income tax on rent. As a non-resident South African I don't have to pay income tax on my salary not sure if that extends to other areas. I was planning on allowing my niece to stay there for a minimal amount (knowing me I probably won't even charge her). So, I'm guessing I will only become liable if my annual income meets a minimum amount which I doubt it will.

I can't speak to a financial advisor because well I'm not in SA and I'm not fluent enough in the language of my residence to speak to anyone here. Thanks for mentioning the income tax though when I was speaking to my family etc about renting the place out and tax never came up.
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Thats a good idea. Charge her enough rent to cover the 10% bond + the utilities. That way the house costs you nothing and tax will be minimal is if anything.
 
curds said:
Mmmh I did not know I had to pay income tax on rent. As a non-resident South African I don't have to pay income tax on my salary not sure if that extends to other areas. I was planning on allowing my niece to stay there for a minimal amount (knowing me I probably won't even charge her). So, I'm guessing I will only become liable if my annual income meets a minimum amount which I doubt it will.

I can't speak to a financial advisor because well I'm not in SA and I'm not fluent enough in the language of my residence to speak to anyone here. Thanks for mentioning the income tax though when I was speaking to my family etc about renting the place out and tax never came up.
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You could just find one and email them. I've never even spoken over the phone or in person with the lady that does my tax, and my financial advisor an I only speak over the phone, if at all.

Putting the money in some kind of investment account, unit trust or index tracker could give you better returns than the 10.8% that you'll pay on your bond.
If you plan to come back to SA and pay taxes before the 5 years it typically takes a rental property to break even, you could also get some money back from SARS.

All of this is things you could maybe consider if you want to maximise your returns. If you care purely for credit score, I doubt it will make a noticeable difference by the time you get back. Banks will fall over themselves to give you a credit card anyway, so you just get one of those and have a decent credit score before long.

AFAIK how much the bank loses because you pay back your loan too fast has no bearing on your score.
 
halfmoonforever said:
Asset vs Liability lesson here. People think buying a house with a bond is an asset. No it's not. You're paying off the bond, which is a liability, and you don't own the house, the bank does.

If I were you I'd pay off the bond immediately. An asset reflects better on your precious "credit score" than it would be debt. I have 0 debt and my credit score is amazing.
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http://www.richdad.com/Resources/Ri...3/rich-dad-scam-6-your-house-is-an-asset.aspx
"If you have a house, paid for or not, that you live in, then it can't be an asset. Instead of putting money in your pocket, it takes money out of your pocket. That is the simple definition of a liability."

Seems you don't know what you are talking about, but at least that goes with the general trend of advice given here.
 
I have a motto : If you have a property, try and pay it off asap.

A big study was done how prepaying your bond can help you into the future.

If you use a bond wisely, you van finance a car, your children's study's, a holiday, you name it.

A bond is the cheapest money to borrow for big things.
 
Good day all. I have a small question to ask. I am considering buying an apartment and I got 3 offers,2 from standard and 1 from Nedbank. The flat cost R1,69 mill and standard bank offered 100% bond at either 10.78%interest over 30 ears or 10.35% interest over 20 years Nedbank made an offer at the annual interest rate of 10.25% over 25 yrs, which is not that bad. I currently bank with standard bank but it seems Nedbank is offering me a better deal as the bond is at annual interest rate. May some help explain what aspects I need to look at to make the decision makingkl clearer for me ?
 
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Perhaps you can start by creating a new thread rather than posting in a different one that is over a year old?
Might work better in your favour.
 
Gills said:
Good day all. I have a small question to ask. I am considering buying an apartment and I got 3 offers,2 from standard and 1 from Nedbank. The flat cost R1,69 mill and standard bank offered 100% bond at either 10.78%interest over 30 ears or 10.35% interest over 20 years Nedbank made an offer at the annual interest rate of 10.25% over 25 yrs, which is not that bad. I currently bank with standard bank but it seems Nedbank is offering me a better deal as the bond is at annual interest rate. May some help explain what aspects I need to look at to make the decision makingkl clearer for me ?
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I say get the lowest possible interest rate, then be disciplined enough to pay it off as soon as possible. As you can see on this table, adding an extra R2000 per month to a 30 year bond extra can save you 1.7 million Rand in the long run.

I would definitely go back to standard Bank as your regular bank and tell them that if they don't match Nedbank's rate, you'll be forced to switch banks.

Screenshot_2017-08-18-06-05-04.png
 
curds said:
Hello,

A little backstory I bought a flat from a developer with my bf and it should be done by the end of the year. We both live abroad and he has no credit score. I think if I remember correctly mine is good to very good. The only debt we have is a cellphone contract I took out for my mother.

Now, I need some advice on how to pay off my bond. I bought a flat from a developer and got a housing loan of prime plus 0.03% We are able to pay around 90% of the bond when it registers. I'm just not sure if paying our bond off so early is wise in terms of our credit score. We eventually want to settle in SA permanently and by then we might have a family so a house would be ideal and we will definitely need a bond for that.

Also, because when I left SA a few years ago I didn't increase my transfer limit etc so when I called the bank to do it they said that they could only increase it to a certain amount for a larger amount I need to come in. So, if I do decide to pay 90% of the bond will the bank be able to debit my account for that amount? I would like to keep family out of it so need a way to pay the bond quickly without giving someone POA.
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if you don't have any other debits - then pay off the bond asap! it'a an enormous relief to actually "own" your property when all around you people bitch & complain about the rising rentals and the difficulty in getting a rental and you have no bond or an insignificantly small amount to pay. I paid R130k back in the early 90's - an estate agent recently offered R1.5m due to the new developments going on around our suburb - my house costs me a mere R700.00 a month and that's just for insurance nothing else.
 
3WA said:
Depends on the contract. The FNB contract I have imposes penalties if I settle without giving three months' notice. So obviously, there's a way to avoid the penalty.
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If you want to close the bond and pay if off is one things VS pay it off, but have the facility open for future use.

I would say first answer that question
 
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