The True Cost of A Payment Holiday

Whether you have taken the payment holiday or are considering it, it’s always best to have all the right information to help your decision.

Here is an example of what that would look like.

Assumptions

1. 1/4/2015
   1. Granted bond in the amount of R1,500,000
   2. Interest rate of 9.5%
   3. Contractual Term 240 months
   4. Monthly Instalment R13,981.97
   5. Total contractual bond repayment R3,335,672.80 (R13,981.97 * 240) ​A
2. 1/4/2020 (month 60)
   1. Applied for 3 months payment holiday
   2. Outstanding balance at the time is R1,338,980.61
   3. You are 5 years in with your bond with 15 years remaining.

Results

1. Keep in mind that monthly interest is still added to your account as you are only given a payment holiday and the rest of the charges are still enforced.
2. Your bond term is not extended with three months as you have a signed agreement that you will be paying the bond over a predetermined term.
3. Account balance after 3 months payment holiday has escalated to R1,381,887.82 due to interest added. This is an R42,907.21 variance.
4. New instalment for the remaining term of your bond R14,541.06
5. Total difference in total bond repayment, due to payment holiday, R77,012.82

In summary, your 3 months payment holiday is costing you R77,012.82