Bond Payment Holiday Calculator
See the true cost of skipping bond payments — capitalised interest, increased monthly payment, extra loan term, and a recovery plan to get back on track
A payment holiday does not stop interest from accruing. Unpaid interest is added to your bond balance (capitalised), meaning you pay interest on interest. Your bank may report the holiday to credit bureaus, which could affect your credit score.
Under the NCA (Section 93), if you are over-indebted you can approach your bank or a debt counsellor. COVID-era precedent showed banks willing to grant 3-6 month holidays in hardship cases.
Understanding Bond Payment Holidays How to use • Formula • Example
How to Use This Calculator
Enter your outstanding bond balance, interest rate (currently prime is 10.25%), and remaining term in years. Then specify the number of months you want to skip payments (banks typically allow 1--6 months) and the type of holiday:
- Full payment holiday: No payments at all -- interest is capitalised (added to your balance)
- Interest-only payments: Pay only the interest portion -- your balance stays the same
Switch to the Recovery Plan tab to see how much extra you'd need to pay each month to get back on track and finish your bond on the original end date.
The Capitalisation Formula
When you take a full payment holiday, unpaid interest is capitalised -- added to your bond balance. Your new balance after the holiday is:
For example, on a R1,100,000 balance at 10.25% for 3 months:
New balance = R1,100,000 × (1.0085)3
≈ R1,100,000 + R28,400 in capitalised interest
After the holiday, your new monthly payment increases because you're paying off a larger balance over a shorter remaining term.
Worked Example
Kagiso has a bond balance of R1,100,000 at 10.25% with 18 years remaining. His current monthly payment is approximately R11,800. Due to temporary job loss, he requests a 3-month full payment holiday.
During the 3 months, interest of approximately R28,400 is capitalised onto his bond. His new balance becomes R1,128,400.
Over the remaining 17 years and 9 months, his new monthly payment increases to approximately R12,150 -- an increase of R350/month.
The total extra interest cost over the life of the loan is approximately R46,000. To finish on his original end date, Kagiso would need to pay R12,250/month -- about R450 more than his original payment.
Frequently Asked Questions
Will a payment holiday affect my credit score?
It depends on the arrangement with your bank. If the payment holiday is formally agreed (restructured terms), your bank should not report it as a missed payment. However, some credit bureaus may note the restructure, which could affect your score.
If you simply stop paying without agreement, the bank will report missed payments to TransUnion, Experian, and other bureaus -- this will significantly damage your credit score and may lead to an ITC listing. Always contact your bank before skipping any payment.
How do I apply for a bond payment holiday in South Africa?
Contact your bank's home loans department directly. You'll need to explain your circumstances (retrenchment, medical emergency, etc.) and provide supporting documentation. Banks are more likely to grant a holiday if:
- Your account is in good standing (no arrears)
- You have a demonstrated hardship (not just convenience)
- You have a plan to resume payments
- You have equity in the property (low LTV)
Under the NCA Section 93, if you are over-indebted, you can approach your bank or a registered debt counsellor for formal debt restructuring, which may include reduced payments or a temporary holiday.
Is interest-only better than a full payment holiday?
Interest-only payments are significantly better from a financial perspective. With interest-only, your bond balance stays the same -- you don't pay interest on interest (compound effect). With a full holiday, unpaid interest is capitalised, meaning you end up paying interest on the accumulated interest for the remaining term.
For a R1,100,000 bond at 10.25%, interest-only payments would be approximately R9,400/month (saving you ~R2,400/month vs the full payment of ~R11,800). This is often more manageable than zero payments and avoids the capitalisation penalty.
What happened with COVID payment holidays in South Africa?
During the 2020 COVID-19 lockdown, South African banks offered 3--6 month payment holidays to qualifying customers. Major banks (Standard Bank, FNB, Absa, Nedbank) allowed borrowers to defer bond payments with interest being capitalised.
The key lesson learned: many borrowers were shocked by the true cost of capitalised interest. A 3-month holiday on a R1M bond added approximately R25,000--R30,000 to the total cost of the loan. This created an important precedent -- banks now have established processes for payment holidays, but the financial impact remains significant.
Can my bank force me to sell if I miss bond payments?
Yes, but there are legal protections. If you default on your bond, the bank must first issue a Section 129 notice under the NCA, giving you 10 business days to bring the account up to date. If you don't, the bank can apply to court for a default judgment and your property can be sold in execution (auction).
The process typically takes 6--12 months from the first missed payment to auction. The Constitutional Court has ruled that courts must consider all circumstances before granting execution orders. Always engage with your bank early -- most prefer to restructure rather than foreclose, as auctions often yield below-market prices.