Tools
Bond reduction calculator: pay your home loan off sooner
A twenty-year bond does not have to take twenty years. Put in the amount, the rate and the years left, and see how much extra a month takes years off the term.
Your instalment now
R 16 256
- Paid over 20 years
- R 3 901 345
- Of which interest
- R 2 401 345
Every rand over the instalment comes off the capital, and the interest for every month after that is worked out on less.
How much extra to pay each month to shorten your bond
Year by year over the full term: pick the year you want to be done, and read off the extra you need each month and what it saves.
| Paid off in | Years saved | Extra per month | Instalment becomes | Interest saved |
|---|---|---|---|---|
| 19 years | 1 | R 218 | R 16 474 | R 145 326 |
| 18 years | 2 | R 470 | R 16 726 | R 288 511 |
| 17 years | 3 | R 763 | R 17 019 | R 429 450 |
| 16 years | 4 | R 1 105 | R 17 361 | R 568 044 |
| 15 years | 5 | R 1 506 | R 17 762 | R 704 191 |
| 14 years | 6 | R 1 980 | R 18 235 | R 837 791 |
| 13 years | 7 | R 2 543 | R 18 799 | R 968 746 |
| 12 years | 8 | R 3 219 | R 19 475 | R 1 096 962 |
| 11 years | 9 | R 4 040 | R 20 295 | R 1 222 348 |
| 10 years | 10 | R 5 049 | R 21 304 | R 1 344 815 |
| 9 years | 11 | R 6 310 | R 22 565 | R 1 464 282 |
| 8 years | 12 | R 7 918 | R 24 174 | R 1 580 671 |
| 7 years | 13 | R 10 023 | R 26 279 | R 1 693 912 |
| 6 years | 14 | R 12 875 | R 29 131 | R 1 803 939 |
| 5 years | 15 | R 16 922 | R 33 177 | R 1 910 697 |
| 4 years | 16 | R 23 061 | R 39 317 | R 2 014 135 |
| 3 years | 17 | R 33 387 | R 49 643 | R 2 114 214 |
| 2 years | 18 | R 54 180 | R 70 435 | R 2 210 900 |
| 1 year | 19 | R 116 842 | R 133 098 | R 2 304 172 |
An estimate on the figures you've typed, with the rate held steady for the whole term. Prime moves, and a bond's rate moves with it. Check with your bank that extra payments go to capital and that there is no penalty on paying it off early. This is not advice.
Why extra bond payments save so much interest
You have R500 spare at the end of the month, and a bond statement which says twenty years. Those two things are more closely related than the statement lets on. The bank works out interest on the balance still owing, every month, and in the early years most of the instalment is interest with only a sliver coming off the capital. Anything you pay over the instalment goes straight onto the balance, so every month after that the bank charges interest on less. The saving builds in your favour.
On a R1.5 million bond at 11.75% over twenty years, an extra R1 000 a month clears it about three and a half years early and saves over R500 000 in interest. The table above works it out on your own figures.
Three things to check with your bank before paying extra
- That extra payments reduce the capital, not next month's instalment. Most South African banks do this by default on a home loan, but ask.
- Whether an access bond lets you draw the extra back out if you need it. That flexibility is worth having, and it's also the temptation.
- That there's no early settlement penalty. There usually isn't on a home loan, but the bank wants ninety days' written notice before you settle in full.
Working out the repayment in the first place is the bond calculator, and the cash a purchase needs before transfer is the transfer and bond cost calculator. Our guide to bond finance in an Offer to Purchase covers the loan itself.