Interest saved and years shaved off by paying extra each month.
Interest saved
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New payoff time
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Time shaved off
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Your breakdown
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Where a small extra payment goes, and why it punches above its weight
A home loan instalment is split between interest and capital, and in the early years it is mostly interest. Any rand you pay on top of the instalment skips that split entirely and goes straight to capital. That matters because interest is charged on the outstanding balance every month, so reducing the balance today shrinks the interest charged on every future month for the rest of the loan. The effect compounds quietly. A modest extra payment that looks trivial against a 20-year bond can erase years of repayments and a startling amount of interest. This calculator shows the size of that effect by running two full amortisation schedules side by side and comparing them.
Two schedules, month by month
Rather than use a shortcut formula, the tool simulates the loan one month at a time. It charges interest on the current balance, applies your instalment, sends the rest to capital, and repeats until the balance hits zero. It does this once at the normal instalment and once with your extra payment added, then reports the difference in months and in total interest. This matters because the saving is not linear: the same extra payment saves far more on a loan with a higher rate or a longer remaining term. Note that this is a pure money calculation with no tax in it. A South African primary residence bond gives no interest deduction to an individual, so unlike some countries there is no tax angle to weigh here, just the arithmetic of compounding.
R1,500 extra on a R1.5 million bond
Consider a fairly typical bond: R1,500,000 borrowed at 11.5 percent over 20 years, with a modest R1,500 added each month. The normal instalment works out to R15,996. Paying R17,496 instead changes the picture sharply.
R1,500 a month, R18,000 a year, knocks almost five years and R677,085 of interest off the bond. The return on that extra cash is effectively your bond rate, tax-free, which is hard to beat with any low-risk investment. The lever is most powerful early in the loan, when the balance and therefore the interest charge are at their highest.
Make sure the extra actually reaches the capital
One practical trap catches South African borrowers often. If you simply pay more into the bond each month, most banks treat the surplus as a prepayment that builds available redraw rather than permanently reducing the loan term, and your debit order stays the same. The interest saving still happens while the money sits there, but the moment you redraw it, the benefit reverses. If your goal is to genuinely shorten the loan, tell the bank to keep your instalment fixed and apply the extra to capital, or be disciplined about never pulling it back. The other judgement call is whether to overpay the bond at all when you carry more expensive debt: a credit card at well over 20 percent should always be cleared before you accelerate an 11.5 percent bond.
Is a lump sum or a monthly extra better for paying off a bond?
A lump sum paid early saves the most per rand because it cuts the balance for the longest stretch of the loan. A steady monthly extra is usually more achievable and still saves a large amount, as the example shows. If you receive a windfall, paying it straight into the bond beats spreading it out, but a regular extra you can sustain beats a one-off you cannot.
What happens to my savings if the interest rate changes?
The tool uses a single fixed rate. If rates rise, the normal instalment buys you less capital each month and the value of your extra payment grows, because you are avoiding interest at the higher rate. If rates fall, the saving shrinks a little. Re-run the calculator at a rate you think is realistic over your remaining term to see the range.