A Quick Way To Pay Off Your Bond
We can see that with a little bit of useful information one can manage to finish the payments on a bond quicker than planned. By just paying a few hundred rands more can make a huge difference on your re-payment period. In this article I will give a few tips on how to save a lot of money and how to finalize your bond a lot quicker.
For example: If you have a bond of R500 000 that you have to cover over a time period of 20 years then your monthly payment would be roughly R5160. If you can manage to pay an extra R300 per month then you can save up to R144 000 and lower the payment term. This is just the first step to give a home buyer his financial freedom.
If you are not able to give that little bit extra a month then there are ways to reduce the interest rate on the bond. We have seen that it is possible by switching over to another financial institution to handle your home loan. If you can manage to find a company that can give you 0.5% less on a bond of 20 years then you can almost save R76 000 on the loan. People should be aware that if they decide to go this way, then they will face some bond cancellation fees. So make sure that you are aware of all the additional costs that would be involved in the cancellation of your current bond. There will be some financial sacrifices in order to get the lower interest rate.
I will advise people that if they manage to get the lower interest rate, they should still pay the same monthly payment. Banks will usually adjust the monthly premium automatically, but by paying the same amount with the lower interest rate will cause you to pay more than expected without seeking extra funds.
People can also finish their bond quicker by investing lump sums of cash into the loan account. Things like annual bonuses, TAX returns etc. They will calculate your interest rates on the amount that you still owe, so the less you owe the more money you will save.
To conclude. We can see that are thus ways to speed up the bond re-payment process, whether you decide to pay a bit extra a month or if you mange to obtain lower interest rates. By using these tips will definitely make a difference. You will see that financial freedom is not that far away as you have thought.