Saving Money On Your Bond

If you are a homeowner looking for ways to save money on your bond, there are always things that you can do to accomplish your goal. Though interest rates are considerably lower than the 20-plus percent range that plagued the country several years back, the increase of rates in the last several months only serves to demonstrate how important it is for every South African to take advantage of every tool available for reducing their home loan. By managing your bond account and being proactive in the way you use your money, you can – in some cases – reduce your bond period by as much a third, saving you nearly half of your overall loan amount.

Paying more when you can

Many homeowners fail to realize that one of the most effective ways to save money on their bond is by making higher payments when possible. If you are able to pay R100 or R200 more each month, you will be dramatically reducing the overall amount of your bond, as well as the total time it will take to repay it. Many people make the mistake of negotiating a lower payment in periods where interest rates are low rather than maintaining the same level of repayment. By doing so, they lose the opportunity to make serious reductions in their bond amount that offer real savings. The fact is that you have no doubt designed your budget with that payment in mind. When interest rates drop, keeping your current budget allocation in place makes sense, and also enable you to take advantage of the fact that extra money deposited into your bond account accrue tax free interest while lowering your overall loan amount.

The power of the internet

Using the internet, you can manage your excess cash in such a way that you reduce your bond amount and save money. Internet banking has, in recent years, become a powerful tool for homeowners who are savvy enough to utilize its many features in ways that directly benefit their personal bottom line. With the internet, you can move your money into your bond account for a short time – even as little as overnight – and then move it back to another account. While it is in your bond account, the money works to reduce your total owed. Some banks do charge fees for handling these monies, so be sure to check on the details before you attempt this practice. If the transactions are free of fees, simply store excess cash in your bond account and move it back into your online account when necessary.

Liquidity is essential

No matter what method you are using to save money on your bond, retaining liquidity in your cash assets is a must. Negotiate with your home loan provider to ensure that you are able to move money into and out of your bond, make extra payments when possible, and still retain access to stored money when you need it. Since banks are only too happy to have your idle capital sitting in one of their accounts, there is usually little difficulty involved in negotiating such capabilities for your bond account.