Generic selectors
Exact matches only
Search in title
Search in content
Search Posts
Search in pages
Search Products
Filter by Categories
B-BBEE
Blog
Company Secretarial
Featured
General Business
General Interest
Investing in Property
Marketing
Personal Growth
Personal Wealth
Tax
Trusts and Estate Planning

You know, for a Pr(Eng); CA(SA); I can sound pretty dumb at times. Like when a client recently asked me if I was familiar with Velocity Banking. Nope, never heard of it!

So he then went to some lengths to explain this miraculous method of paying off your mortgage bond in no time flat.

Um, surely all you’re saying is that if you put all of your excess income over expenditure towards your bond, then, because that extra reduces the capital, it also reduces the interest and the interest on the interest?

Yes, well, if you put it like that, I guess it’s not magic, just common sense.

This reminded me of when I was bankrupt. My then girlfriend (later to become my second wife) had recently divorced and acquired the family home along with the outstanding bond. Between us, we set a goal of paying off the bond as quickly as possible.

I set up an amortisation graph that looked something like this, showing full settlement after 59 months at R2 000 per month –

Then, whenever we had spare cash, we went to the ATM and deposited it against the bond. After 7 months and having paid in R5 800 extra, the graph would look like this, with settlement time down from 59 to 55 months. The R5 800 would grow to R10 000 due to the saving of interest and interest on interest –

So yes, Velocity Banking is a great idea now that I know what it is!

 

Need help with your Trust or Buisness?

Contact us today or set up a free meeting with our CEO, Derek Springett. We have been offering expert advice and business services since 1971. You can also visit our online store to see our full list of services.