You will have seen from the examples above that you can save thousands of Rands and settle your bond years earlier by applying all or some or these methods. The maximum benefit will be gained by applying as many methods as possible in combination, making the additional payments into the bond as large as possible, and leaving the money in the bond for as long as possible.
If you change jobs and your payday changes, ensure that you notify the bank immediately. Paying just 2 day earlier could knock as 2 months of your loan term.
A lot of people make the mistake of buying a house very close to the maximum for which they qualify. If you require 100% finance because you have no cash for a deposit, and you need the bank to add the legal fees and transfer duties to your bond
Today’s competition between banks for bond business is very strong. This results in them making various offers to their customers in order to make buying a home easier. This includes adding a variety of costs onto the bond account
This piece of information is closely related to the section on not taking a 13th cheque from your employer. When structuring your remuneration package, you may be entitled to receive a portion of your earnings in the form of a travel, or car allowance. This has certain tax benefits, as long as you are able …
In South Africa, interest rates are often subject to wide fluctuations with little warning. When rates decrease, the banks generally reduce your monthly instalment accordingly, and place the onus on you to contact them if you do not want this change to be made.
A popular practice amongst companies today is to allow staff to decide whether or not they would like a 13th cheque at the end of the year. The staff member can elect to receive his or her annual salary in 12 monthly payments, or reduce the amount paid each month in order to build up a reserve which is paid out as a bonus, or 13th cheque.
These examples show how much you can benefit simply by placing funds which you only need at a later date, into your bond account. Even if you can only leave the money in the bond for a few days at a time, there are still significant benefits to be gained.
The problem, as discussed in the previous article, is the capitalisation of interest, over and over again EVERY MONTH FOR 20 YEARS! So what do we do about it? Well, the fact that interest is calculated daily can be used to our advantage.
The purpose of this series of articles is to provide bondholders in South Africa with practical and simple methods of reducing their bond terms, thereby saving money in the process. We will use practical examples to illustrate the effect that these methods can have in reducing your bond term.