Is your homeloan the best place to store your savings?

[FlashSA]

I have always used an FNB simplysave account which pays minimal interest to store rainy day savings but I have read many things that say it should be in the bond to reduce interest charges there - which would effectively earn me 9% interest in saved interest on that money as that is what my bond rate is. One can also get all of the extra money paid into the bond back in a couple of days if the $%^ hits the fan.

Are their any pitfalls in using this method? I am with SA Homeloans....

 

[S1lv3r H4wK]

I'm no expert but it sounds good to me. It's effectively money well invested.

 

[Hamster]

I believe they call this an access bond yes?

As far as I know you spend your money in this order:

1. Security/Insurance
2. Debt
3. Invest

So yeah, paying extra into your bond early on might knock off a few years of interest. I'd do that.

 

[surface]

Well, FNB simply save gives 2.3% interest and if you park extra money in home loan access bond/flexi bond (I take it that is what are you asking), then you would definitely benefit interest-wise. I do this regularly. However, be aware that there have been reported cases when people were not able to use this access bond.

http://hellopeter.com/standard-bank/complaints/withdraw-on-access-bond-1338006

Some recent articles
http://www.iol.co.za/business/perso...-into-your-access-bond-1.1580845#.U3hl_nbzf5s

Also, this facility is granted at bank's sole discretion (or a financial institution's) and standard bank clause reads as below.
The AccessBond Facility is granted to you at our sole discretion, exercised reasonably and we may:
5.11.1 immediately restrict activity or suspend all or part of the AccessBond Facility, without notice to you, if you are in default under the Agreement;
5.11.2 withdraw all or part of the AccessBond Facility on at least 10 (ten) Business Days prior written notice to you of the intended withdrawal; or
5.11.3 immediately restrict activity, suspend all or part of the AccessBond Facility or withdraw the AccessBond Facility, without notice to you, if we in any way know or suspect that the AccessBond Facility is being used fraudulently, negligently or for illegal activities, or if we must do so to comply with any law.

 

[Creag]

Are there better ways of parking your savings? I am not sure. However, it has been my practice for a number of years now. Any bonuses or savings will be parked in my access bond until I need it (or not). In my mind it makes sense to park my bonus there and leave it until I need to for school fees or the purchase for something around the house. I prefer to pay cash than get into debt, so this is a logical way of doing things for me.

 

[Other Pineapple Smurf]

Parking your money in the bond is the best place if you intend to use it in the near future.

If you however just want to plonk it down somewhere to the get best return, then I would rather throw it into any other existing debt you might have as the bond is the one with the lowest interest.

 

[FlashSA]

No debts besides car and bond so the bond looks like a winner.

 

[Grep]

Yup, took everything out the money market, had a spare 100k lying around and put it into the bond. 5 yrs left on the bond for the house and after calculation, I am saving about 70k because of that.

 

[ToxicBunny]

It's all a balancing act... A bond will have around 9% interest rate... So parking money in there can 'earn' you 9% if you're strict with yourself in terms of your savings... If you're not then there are better places to put the monry

 

[HavocXphere]

Well, FNB simply save gives 2.3% interest and if you park extra money in home loan access bond/flexi bond (I take it that is what are you asking), then you would definitely benefit interest-wise. I do this regularly. However, be aware that there have been reported cases when people were not able to use this access bond.

Thats pretty much the only hickup.

 

[Viper25]

Remember that when you do withdraw funds from your bond access account, your monthly instalment will also increase.
I found this out the hard way.

 

[Sinbad]

Remember that when you do withdraw funds from your bond access account, your monthly instalment will also increase.
I found this out the hard way.

Nope. If they do then you're not withdrawing your deposits, but your actual repayments which I don't believe they allow any more?

 

[OCP]

Nope. If they do then you're not withdrawing your deposits, but your actual repayments which I don't believe they allow any more?

Yes and no - if you put extra money in the interrest cap you pay each month goes down so you have to pay less.

If you take out the 'extra' your cap goes up again - you pay in more.

But.. you can only take out extra - not what has been payed towards interrest.

If you have paid in extra you can arrange with the bank for the monthly installments to be the same (ie. They wont automatically deduct less)

 

[Tinuva]

Interesting, on my FNB home loan, they don't reduce the monthly payment when I pay in extra, but I didn't ask them to not reduce it. It is fine either way, I am planning to pay this of within 10 years vs 20 years. In the one event I did need the extra cash, they also didn't increase my monthly payments, however I am far ahead of where I should be, so I doubt they will just increase it.

 

[Cius]

Have an open access bond and when I put spare cash in they reduced my montly payments which annoyed me. Seems they want me to pay the bond of in 20 years regardless where I just want the thing gone. Hence I went down and fixed my bond depit order at a much higher rate than was origonally required regardless of what they say it should be.

I have had no issue moving money in and out my bond over the years. For instance I saved some money for a vacation and left it in the bond for a while saving me a bunch of interest and now that the vacation is nearing I am withdrawing some of it to pay the deposits etc. I tend to keep as much of my spare cash in my access bond as possible as it does make a difference in how fast you can pay the bond off.

 

[Viper25]

Nope. If they do then you're not withdrawing your deposits, but your actual repayments which I don't believe they allow any more?

Well, I have an access account on my home loan. Each month I was paying the usual monthly repayment + X amount of cash.
Over the years the advance or access portion of my home loan accumulated to over R60 000. I then needed some cash, so I went into the branch and withdrew about R50 000 from my access account. The following month, my usual monthly payment had increased by about R300.

 

[Sinbad]

Well, I have an access account on my home loan. Each month I was paying the usual monthly repayment + X amount of cash.
Over the years the advance or access portion of my home loan accumulated to over R60 000. I then needed some cash, so I went into the branch and withdrew about R50 000 from my access account. The following month, my usual monthly payment had increased by about R300.

Not perhaps because interest rates had gone up?

 

[ToxicBunny]

Well, I have an access account on my home loan. Each month I was paying the usual monthly repayment + X amount of cash.
Over the years the advance or access portion of my home loan accumulated to over R60 000. I then needed some cash, so I went into the branch and withdrew about R50 000 from my access account. The following month, my usual monthly payment had increased by about R300.

The R300 increase sounds more like an interest rate hike, rather than anything else.

 

[Viper25]

Not perhaps because interest rates had gone up?

Nope, it wasn't during the interest rate hike period.
Was some time last year. I withdrew the cash and they informed me at the branch that my new monthly instalment has gone up by ~R300 because of the withdrawal. I informed them that I am withdrawing from the surplus funds/deposits I had in my home loan and they said it doesn't make a difference.
I had no time to argue with them and I just needed the cash, so I just agreed and took the cash.

 

[FlashSA]

Nope, it wasn't during the interest rate hike period.
Was some time last year. I withdrew the cash and they informed me at the branch that my new monthly instalment has gone up by ~R300 because of the withdrawal. I informed them that I am withdrawing from the surplus funds/deposits I had in my home loan and they said it doesn't make a difference.
I had no time to argue with them and I just needed the cash, so I just agreed and took the cash.

That is BS. I would take them on....