Bond repayment calculations

[janehenry]

Is anyone in the know how standard bank calculate bond repayments?

I have recently paid an additional R40k into my bond and asked for a recalculation. The result was that my monthly repayment has increased by R50 per month. How is it mathematically possibly that I have reduced the capital amount and the installments increased?

 

[hsrl]

@janehenry Yeah, that doesn’t seem right.

There are 2 mechanisms:
1. Flexi bond where you can add additional funds into your bond but the funds remain available. Your payment stays the same, but the interest paid and term are reduced.

• Recalculated bond where there term remains the same, but the monthly payment should be reduced.

Maybe check the calculations again. Are you sure they haven’t changed the interest rate or returned the term? Otherwise it might just be an error.

 

[janehenry]

@hsrl Thanks yes I have option 2 and recalculate my monthly payment after each extra deposit I make. Usually they drop the installment amount but this time they told me it went up slightly! I have challenged it and they tried to fob me off with a weak and flawed reason:

"When I requested an explanation why the instalment was increased the consultant advised that although you transferred funds into your Home Loan Account, the interest debit on the account is quite a huge amount and the transfers of R40,000-00 that you made into the Account makes no difference"

 

[hsrl]

@janehenry Still shouldn’t have gone up though. Mathematically it should always go down.

 

[jaguar007]

@janehenry There is a mortgage calculation video on YouTube that will help work it out for you.

 

[greenleaf62]

@janehenry Could be that the R40k wasn't a "down payment" but added as a flexible amount that can be drawn in the future (access bond). Access bond payments don't decrease your installments but only reduce the interest portion of repayments. Also haven't checked recently but could be interest rates that went up at the same time.

 

[janehenry]

@greenleaf62 Thanks. I will ask them if this is the case.