This week, an FM reader asks whether there are any workable ideas for paying off a bond in a shorter time than the usual 20 years
Paying off a bond in less than 20 years is always a good idea. This is especially relevant in the rising interest rate environment we’re now in. To pay the bond off faster requires that the reader increase their monthly instalment. Paying in a little extra from the start can save a property owner a lot of money over the repayment period. The figures below, sourced from the FNB home loan calculator, show the potential savings for a home loan with an 8.25% interest rate.
The more interesting question is: should you try to settle your home loan in a shorter period? Our view is yes, but … Yes, to the extent that you have additional cash flow available, but only if your personal balance sheet allows you to.
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