The interest rate and term of your bond are probably the most important factors of your bond.
Here are some tips and guidelines when you are in the process of securing a bond. Bond repayments are calculated daily and billed monthly.
You can reduce the term of your bond, in other words the period of repayment.
· If you have a bond of R100 000, by paying an extra R100.00 every month the term shortens by seven years. So if your bond term was 20 years it will effectively be reduced to 13 years.
· The money saved from interest repayments is worth the effort.
· If you make payments towards the bond, try and pay before the end of the month, this reduces the interest calculated.
· If you have a good credit reference, speak with your bank and negotiate a reduced interest rate.
· Depending on your credit rating, you could negotiate a fixed rate for a predetermined period. In the event of interest rates increasing, you save on that increase for the fixed period.
If you fail to secure a fixed interest rate then you could request an extension on your payment term. This reduces your monthly bond repayments but the interest paid at the end of the term is much more. If you then pay a bit more towards the monthly instalment you again reduce this term.
The initial deposit you put down against the bond is crucial in determining your monthly repayment. If you put down a deposit larger than the required percentage it decreases the total value of the bond thus reducing your monthly repayments. The size of the deposit you put down with the bank can also reduce the term of the bond. A bond is possibly the cheapest debt you could have compared to vehicle hire purchase finance, credit cards or personal loans.
Try not to borrow against your bond. Interest rates are stable for the interim, try to plan for and adjust your lifestyle to make provision for when bond rates increase. Should it then increase, you are on a more stable financial footing.
Myroof can assist you in securing the best bond rates. Contact us today.