Pay off the bond faster — or invest the extra?

How we calculate it

• Paying the bond is a guaranteed, tax-free return at your bond rate — every Rand you put in stops costing you interest at that rate, and SARS does not tax interest you did not pay.
• Both sides spend exactly the same each month for the years left on the bond: the normal instalment plus the extra amount.
• Pay the bond faster: the extra goes into the bond until it is paid off; from then on the whole instalment plus the extra is invested until the bond would have ended.
• Invest: you pay the normal instalment and invest the extra from today.
• When the bond would have ended, both sides owe nothing — so the side with the bigger investment pot, after tax, wins. The graph shows the gap each year: investments after tax less the bond still owed.
• Tax on a normal (taxable) investment is capital gains tax when you cash it in: 40% of the gain is added to your income, so the tax is 40% of your marginal rate (at most 18% of the gain). In a tax-free savings account there is no tax on the growth.
• Rand as spent, not today’s money; returns are an assumption, not a promise.

Where the typical figures come from

• Bond rate 10.75%: prime is 10.75% since the Reserve Bank raised the repo rate to 7.25% on 23 September 2026. Use the rate on your own bond statement. eNCA, SARB decision.
• Capital gains tax: 40% inclusion rate for individuals, taxed at your marginal rate (top rate 45%). SARS, Capital Gains Tax.
• Our estimates, not sourced: the 9% a year investment return (the same figure as our rent-or-buy tool) and the 36% tax bracket. Use your own.

Left out: the annual capital gains exclusion (so taxable investing is shown slightly worse than it is), tax on interest and dividends paid along the way, TFSA contribution limits (the whole instalment invested after the bond is paid off will usually be more than a tax-free savings account allows), bond fees, and changes to the bond rate. Extra money paid into an access bond can often be taken back out, which an investment also allows. Calculations, not advice.