There are no tricks to paying your home loan faster than the mandated period—there are only benefits and savings.
After the goal of buying a property is achieved, you may realise that the expense of running your own household can be financially constraining. Maintenance of the property and the rising costs of utilities, insurance, and the overall increasing cost of living can be burdensome.
Sacrifices are often made to ensure that your property asset not only retains value but also increases its worth. Bear in mind too that a large portion of your monthly repayment goes towards the interest on the home loan. Until that interest is reduced substantially, it may feel like your loan amount is barely moving, and the 20-year loan can feel like an eternity.
There are ways, however, to reduce the repayment term and pay off your home loan far quicker than the term of the agreement. These tried and tested tips will show you the way:
Pay extra into your home loan
This is also known as capital reduction, which refers to reducing the outstanding loan balance by making extra payments or lump-sum payments into the loan. This reduces the amount of interest you will pay over the life of the loan. When you do this, you will have a choice to lower your monthly instalment or keep it the same so you can pay it off faster.
Any additional payment made directly to the capital reduces interest over the loan term.
Even paying off just R1,000 extra per month can shave years off a 20-year bond.
Use of an access bond
This is also called a flexible facility or flexi reserve. When you deposit extra money into the home loan, you are able to withdraw that ‘extra’ when you need it, such as when there is an emergency.
Banks allow you to deposit surplus funds into your home loan. Such may be the increase you receive in your salary, bonuses, or any windfall.
You can still withdraw the funds if needed, but in the meantime, you reduce interest.
Increase your monthly repayment
This may be obvious, but if you decide to pay more into your home loan on a regular monthly basis, it will save you significantly on the interest you are paying over the term and on a monthly basis. This also means you will own more equity in the property than you would if you merely paid only the specified and set instalment.
Simply rounding up your instalment to the nearest ‘0’, for example, R6 541 to R7 000, will accelerate capital reduction. There is also psychological evidence that people prefer rounded numbers, as they are easy to process mentally.
Ask your bank to automatically debit more than the minimum each month.
Pay into the home loan lump sums and windfalls
It's obvious that the best way to pay off your home loan faster is simply to make more payments. Every extra rand reduces the loan balance and saves money over the long term. Whilst it may be tempting to use a bonus, a tax refund, or an inheritance for that long-desired international holiday or another indulgence, paying this windfall into your home loan translates into less debt over the repayment term.
Allocate one-off windfalls directly into the home loan account.
This has a compounding effect by cutting interest from that point.
Switch from 20-year to 15-year term
You may be aware that you can switch your home loan repayment term from the traditional 20 years to 30 years. But did you know you can also switch it down? You’ll be paying more than the current minimum monthly amount, but you’ll be reducing the home loan faster, saving significantly in interest.
Restructure the bond into a shorter repayment term if affordable.
Interest savings over the life of the loan can be huge, but the monthly instalments are higher.
Note interest rate changes
Changes in the interest rate directly affect your home loan repayment. The lower the interest rate, the lower your borrowing costs, but the opposite also applies. Also, when the interest rate drops, more people enter the buying market, which can lead to an appreciation in your property’s value.
Review your home loan rate with the bank and negotiate a better rate if your risk profile has improved.
Even a 0.25% lower rate can save you thousands over time.
The best strategy
If you combine extra monthly payments and channel all windfalls into the loan, you can reduce your home loan very quickly. And if you pay another R2 000 extra monthly into your bond, at an interest rate of 10.5%, you could reduce the term of your repayment by more than seven years, as per this example:
Home loan repayment:
- Monthly instalment: R9,984.
- Total term: 20 years.
- Total paid over 20 years: ±R2,396,160.
- Total interest paid: ±R1.40 million.
Paying R2,000 extra per month:
- Monthly instalment: R11,984.
- Bond fully repaid in: 12 years 7 months.
- Years saved: ±7 years 5 months.
- Total paid over loan term: ±R1,809,584.
- Total interest paid: ±R810,000
- Approximate interest saving: ±R590,000.
Final thought
Paying off your home loan faster is not about making one big sacrifice. It is about building small, consistent habits that reduce the capital amount, lower the interest charged, and shorten the time you stay in debt.
Even a small extra monthly payment can make a meaningful difference over time. Before changing your repayment structure, ask your bank for a revised repayment projection so you can see exactly how much interest you could save and how many years you could cut from your bond.
The most useful approach is to treat your home loan as a long-term savings tool. Every extra rand paid into the bond helps you build equity, improve financial security, and move closer to owning your home outright.
