How to Hack A Home Loan

A R1 Million Bond at prime (7%) will have an installment of R7,753/month.

Paying the minimum results in a monthly payment for 20 years (240 months) and an interest bill of around R860k.

So how do you reduce the length and the interest bill?
1. Have a deposit

A 10% deposit reduces the bond amount to R900k.

- Monthly payment R6,978 (~R775/month less)
- Total interest bill is ~R775k (R86k less!)

A deposit is also a great way to improve your chances of getting a bond approved and can help you negotiate a better rate
2. Negotiate a better interest rate

Apply at all the banks, use a bond originator, and negotiate.


Small reductions pack big punches!
A 0.25% reduction on a R1 Million bond reduces the installment to R7604/month saves you R75,000 in interest!
3. Pay extra if you can

Interest on your bond is calculated daily. If you make additional payments into your bond, it immediately starts reducing your interest bill.

Even an extra R200/month:
- Saves you about R52k in interest
- Bond paid off 1 year faster
4. Negotiate price/buy for less

Reducing the purchase price has a huge impact - especially if you put the savings into the bond as an extra payment.

A 900k purchase with the R775/month saving put back into the bond:
- Interest saved ~1/4 Million Rand
- Bond paid in ~16 years
5. The biggest hack - Do all of the above!

What if you managed to to:
- Buy for R900k (instead of R1Mil)
- Put down a 10% deposit (R90k => bond amount R810k)
- Got your interest rate down to 6.75%
- Put all savings back into your bond and
- Paid an extra R200/month?

You have just saved yourself R460k in interest and paid off your home loan in 13 years instead of 20!
Some useful resources for home loan calculations:

- Ooba home loan calculators

- Home loan tracking and projection spreadsheet -

Current and historic prime interest rate
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