YOUR MONEY: How to squeeze out relief from your bond

Question:

My bond instalment has increased by R2,800 since I got the bond approved in 2022. Would my bank be willing to reduce my interest rate? What’s the best way to get it to agree? Has anyone tried this before?

— A Fat Wallet community member

Answer:

The increase you’ve experienced since 2022 has been because of rising rates; your bond will be linked to the interest rate (prime, which is now at 11.75%). So when rates start coming down, which they are expected to do this year (hopefully), your monthly repayment will decrease.

But you certainly should also try to get the current rate that is charged by your bank lowered, though most banks will consider reviewing the rate only every two years or more.

Check with the bank what its rules are. If it will consider a review only later in the year, when the bond is two years old, use that time to improve the likelihood of a rate reduction.

Check your credit report (all the local credit bureaus will give you a free online report) and see where you may be able to improve. Making sure all debt repayments are current and reducing your credit card debt will both work in your favour.

You may also have had a promotion at work or even got married, both of which may benefit you. If your bank declines your request for a reduced rate, try again next year. Lastly, consider shopping around at other banks, but remember there are fees associated with moving a bond.

— Your Money team

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