Increased Installment Calculator

This calculator reflects the interest savings resulting from an increased monthly bond repayment amount.

The assumption is that an amount over an above the required monthly bond repayment amount is paid on a monthly basis and the bond repayment period is adjusted accordingly. The result is that the capital amount of the bond will be repaid over a shorter bond period and that an interest saving will result from the increased monthly installments.

An important factor to realize is that this interest saving occurs over the entire adjusted bond period. The value calculated should not be confused with a saving in present value terms as inflation plays a significant role in the value of the interest saved.

An average inflation rate over the bond term is therefore included in the variables in order to discount the interest saving amount to a present value. The net result is an amount displayed in today's monetary terms.

The calculator also displays an effective investment return from depositing the increased installment annuity into the bond account. This return is reflected as a percentage before taking inflation into account.

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