The South African Reserve Bank has increased rates by 25 basis points, taking the repo rate to 7.25% and prime to 10.75%.
For many homeowners, that’s another increase on a bond that already feels tight. Most people respond by adjusting their budgets and absorbing the higher instalment where they can. And in this market, that’s understandable.
But if you do have a bit of room, there’s a smarter way to approach it.
Instead of letting your repayment move up and down with the rate cycle, consider setting it slightly higher than required and keeping it there.
Here’s why it works:
When rates go up, more of your monthly instalment goes towards interest, and less towards the capital. That’s what stretches your loan term and increases the total cost of your home.
But if you consistently pay more than the minimum required instalment, you push extra money straight into the capital portion of the loan.
That does two things:
- It reduces the outstanding balance faster
- It cuts the total interest you’ll pay overtime
In other words, you take back some control from the interest rate cycle. This isn’t about trying to outguess the market. It’s about discipline.
Let’s say your bond repayment increases because of a rate hike. If you adjust your payment upwards and then keep it at that higher level, even when rates eventually stabilise or ease, you’re effectively building a buffer into your bond. Every extra rand goes to work immediately.
And over time, the impact is significant:
- Years shaved off your bond term
- Hundreds of thousands saved in interest
- A much faster path to owning your home outright
Of course, this only works if you have the financial room to do it. If you don’t, focus on consistency:
• Add a fixed extra amount to your monthly payment. Even a few hundred rand goes straight off your capital
• Round your instalment up to the next R500 or R1,000 and leave it there
• Put bonuses, refunds or once-off cash directly into your bond instead of spending it
Small changes here make a real difference over time. It’s not complicated, it is more deliberate. Interest rates will move. They always do. But your strategy doesn’t have to. Because the goal isn’t to keep up with your bond: it’s to get rid of it.
