Lump Sum Payment Calculator
See exactly how a once-off bonus, inheritance, or savings payment cuts your bond term and saves interest
Three levels of detail — pick yours
Balance + rate + term + lump sum → interest saved and time saved.
Timing impact analysis, reduce-term vs reduce-payment comparison, multi-timing scenarios.
Opportunity cost (bond vs invest), lump sum source selector, and combined extra-payment strategy.
How to Use This Calculator
Enter your current bond balance, interest rate, and remaining term. Enter the lump sum amount — this could be an annual bonus, an inheritance, savings, or any once-off amount. Choose whether to apply it now or in a specific number of months (e.g. 12 months for a year-end bonus).
The calculator shows two options: reduce the term (keep your current monthly payment and finish the bond sooner) or reduce the payment (recalculate the monthly payment over the same remaining term). It compares the interest saved and time saved for each option.
How It's Calculated
Option A (reduce term):
New payoff months = log(M ÷ (M − r × B)) ÷ log(1 + r)
Where M = current monthly, r = monthly rate, B = new balance
Option B (reduce payment):
New monthly = PMT(new balance, rate, remaining term)
The earlier in your loan you make a lump sum payment, the greater the impact — because more of each subsequent payment goes to principal instead of interest. A lump sum in year 1 saves more than the same amount applied in year 15.
Worked Example
Kabelo has a bond balance of R1,000,000 at 10.25% with 18 years remaining. His monthly payment is R9,740. He receives a year-end bonus and decides to put R100,000 directly onto his bond.
Option A — Reduce term:
New balance: R900,000
Bond paid off in approximately 15 years 1 month instead of 18 years
Time saved: 2 years, 11 months
Interest saved: approximately R194,000
Option B — Reduce monthly payment:
New monthly payment: R8,766 (saving R974/month)
Interest saved over 18 years: approximately R110,000
By choosing to keep the same monthly payment (Option A), Kabelo saves an extra R84,000 in interest compared to reducing his payment.
When to Apply a Lump Sum Payment
The timing of a lump sum payment has a dramatic effect on total interest saved. Early in a bond, almost every rand of a lump sum reduces your interest burden for the remaining decades. Later in the bond, most of your monthly payment is already going to principal, so the impact is smaller.
As a rule of thumb: a lump sum applied in year 1–5 of a 20-year bond saves roughly 3–5 times more interest than the same amount applied in years 15–20.
Common sources of lump sum payments in South Africa:
- Year-end bonus or 13th cheque
- Tax refund from SARS
- Inheritance or estate proceeds
- Sale of an asset (car, investment)
- Profit from a side business
- Maturing investment or savings account
Frequently Asked Questions
How do I make a lump sum payment on my South African home loan?
Log in to your bank's online banking and make an EFT to your home loan account. Alternatively, visit a branch or use the bank's app. Ensure you specify that the payment is an additional capital payment — some banks default to advancing your next instalment rather than reducing your balance. Contact your bank to confirm how extra payments are applied. For FNB, ABSA, Standard Bank, and Nedbank, the online platforms all support direct capital payments.
Should I put a bonus into my bond or invest it?
The right choice depends on your investment return versus your bond interest rate. Your bond costs 10.25% guaranteed. If you can reliably earn more than 10.25% after tax by investing, investing wins financially. In practice, a balanced portfolio may return 10–12% over the long run, but with volatility. Paying off your bond is a guaranteed risk-free return equal to your bond rate. Many financial advisors recommend a hybrid approach: max out your TFSA (tax-free savings account) first, then put the remainder into your bond.
Does a lump sum payment reduce my monthly payment automatically?
Not automatically. In most South African banks, when you make a lump sum capital payment, your monthly debit order stays the same and you pay off the bond sooner (Option A). To reduce your monthly payment (Option B), you need to contact your bank and formally request a recalculation of your instalment based on the reduced balance. Some banks do this automatically at each anniversary; check with yours.
How much interest can I save by paying R100,000 off my bond?
For a R1,000,000 bond at 10.25% with 18 years remaining, paying R100,000 now and keeping the same monthly payment saves approximately R194,000 in interest and cuts nearly 3 years off the bond. The saving is higher the earlier in the bond you make the payment, and lower if you choose to reduce your monthly payment instead of keeping it the same.
Can I access the lump sum I paid into my bond later?
Only if you have an access bond (also called a flexible bond or FlexiReserve). With an access bond, capital you have paid in can be re-drawn at any time up to the original bond amount. With a standard (non-access) bond, once you pay capital, you cannot re-draw it without formally applying for a new loan or a bond restructure. If flexibility is important, ask your bank about upgrading to an access facility.