The Smartest Black Friday Deal: Your Home Loan

This Black Friday, don’t just chase deals in stores. A small extra payment into your home loan could give you the biggest savings of all.

Black Friday is around the corner, and South Africans are preparing to hunt for bargains, from kitchen appliances to televisions and everything in between. It’s a day that promises savings — or at least, the feeling of it. But while a discounted gadget might save you a few hundred rand, there’s another kind of “sale” that can save you hundreds of thousands over time: paying off your home loan faster.

Many homeowners don’t realise just how much they pay in interest over the life of a bond. A R1 million home loan, repaid over 20 years at an interest rate of 11.75%, will end up costing close to R2.6 million in total. In other words, more than half of what you pay goes to the bank in interest, not toward your home itself. The good news is that you can change that, and the savings can be dramatic.

Most banks allow you to pay extra into your bond at any time — whether it’s a lump sum or a small monthly addition. You should confirm with your bank how extra payments are treated under your specific home loan product. In some instances, the extra funds you pay in will not reduce the capital but remain in a flexi account so that you can withdraw it again. Therefore, it is very important to inform your bank that you wish to reduce the term of your bond with the extra funds so that they can make the necessary adjustments on your home loan product to achieve this result. Also talk to your bank about your monthly instalment and that you do not want the monthly instalment to reduce.

To give a sense of how it works, there’s a simple rule of thumb often used by financial planners: if you pay just 10% more than your required monthly instalment, you can shave roughly three years off a 20-year bond. Paying 20% more could shorten your repayment period by almost six years. The exact numbers depend on your interest rate and balance, but the principle never changes, the earlier and more consistently you pay extra, the more you save.

You can also work it out more precisely using an amortisation calculator, or by asking your bank or financial planner to help you calculate your “cost of credit.” This figure shows how much your loan will cost you in total, including interest. By comparing it before and after making an extra payment, you can literally see how each contribution reduces your long-term cost.

Although we are not financial planners, we often see how a few small, thoughtful decisions about your bond can lead to remarkable long-term savings. A home is more than an investment, it is security, stability, and often the largest financial commitment a person makes. Understanding how your bond works is part of protecting that commitment and building financial peace of mind.

So, while you’re planning your Black Friday shopping list this year, consider this: instead of another appliance or gadget, what if you “bought” three years off your home loan? That’s the kind of saving that lasts and one that makes the biggest difference where it matters most: in your home, your family, and your future.

Written by: Marert Carroll and Irma Gaybba
Moderated and approved by: Stacey Barnard

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