Paying extra into your bond: what R1 000 a month really saves
On a R1.5 million bond at 10.75% over 20 years, R1 000 extra a month saves about R451 500 in interest and finishes the bond 3.5 years early.
In 30 seconds
- Early on, about R13 400 of a R15 230 payment is interest - on R1.5 million at 10.75%, only R1 800 of the first payment cuts what you owe.
- On R1.5 million at 10.75%, R1 000 extra a month saves about R2.28 for every rand you add - R451 500 in total.
- With prime at 10.75%, every rand you prepay earns your bond rate, guaranteed and tax-free - a higher rate makes extra payments worth more.
Why extra payments work so well
A bond repayment is fixed, but its make-up is not. Early on, most of it is interest. On R1.5 million at 10.75%, the first month's interest is about R13 400 of a R15 230 payment - only R1 800 reduces what you owe.
An extra payment skips the interest and goes straight to capital. That lowers next month's interest, which leaves more of the normal payment for capital, and so on. The saving compounds the same way an investment does.
The rate you are paying
The SARB raised the repo rate by 0.25 percentage points to 7.25% at its September 2026 meeting, which puts the prime lending rate at 10.75%. Most home loans are priced at prime plus or minus a margin, so your rate moved with it.
We could not load the SARB's own rates page or MPC statement when we checked (15 Oct 2026); the 7.25% repo and 10.75% prime figures come from news reports of the September 2026 decision. Check your bond statement for your actual rate - it may be above or below prime.
A higher rate makes extra payments more valuable, not less: every rand you prepay saves you your bond rate, guaranteed and tax-free.
Before you pay extra
- Clear expensive debt first. Credit cards and personal loans usually charge well above your bond rate.
- Have an emergency fund. If your bond is an access bond you can draw the extra back out, but check whether your bank charges for it or can reduce the facility.
- Compare with a retirement annuity. If you pay tax at 31% or more, the RA deduction may beat the bond rate - see our RA deduction post.
- Ask the bank to keep the instalment the same. Some recalculate a lower instalment after a lump sum, which quietly undoes the saving.
Sources
- Repo 7.25% and prime 10.75% from 25 September 2026: news reports of the SARB MPC decision; primary source SARB - Current market rates could not be read when checked (see note above).
- Interest saved, months saved and first-month split: our own calculation, shown in the calculator above.
Education, not financial advice. This post explains how the rules and the arithmetic work. It does not recommend any financial product, and your own situation may differ - speak to a registered financial adviser or tax practitioner before you act. Figures were checked against the linked sources on the date above.