Should I pay off my bond or invest in a retirement annuity in South Africa?

It depends on your marginal tax rate and bond interest rate. If your marginal tax rate is 31% and your bond rate is prime (11.25%), the after-tax cost of your bond is about 7.8%. A retirement annuity at 10% growth with a 31% tax deduction gives an effective return of around 14.5%. In this case, investing in the RA wins. If your bond rate is above 13–14% or your marginal rate is low (18%), extra bond payments are often better.

What is the current prime interest rate in South Africa?

The current prime lending rate in South Africa is 11.25% (as of early 2026), following the SARB repo rate of 7.75%. Most home loans are priced at prime minus 0.5% to prime plus 2% depending on your credit profile.

How much do I save by paying extra into my bond?

Paying just R500 extra per month on a R1.5 million bond at 11.25% saves approximately R380,000 in interest and cuts 4 years off your loan term. Use our extra payment calculator to see your exact savings.

Property vs RA Calculator South Africa — Bond Repayment, Leverage & Appreciation

Bond Repayment Calculator

See your monthly instalment, total interest, and a full year-by-year amortisation.

Loan Amount (Bond Value) e.g. R1,500,000

Interest Rate (% p.a.) Use prime (11.25%)

Loan Term (years)

Year	Opening Balance	Principal Paid	Interest Paid	Closing Balance

Extra Payment Impact Calculator

See how much time and money you save by paying a little extra each month.

Current Bond Balance

Interest Rate (% p.a.) Use prime

Remaining Term (years)

Extra Monthly Payment

Year	Balance (Normal)	Balance (Extra)	Interest Saved (Cumul.)

Property vs RA

Should you build equity in your property or invest in a retirement annuity? Now with leverage and appreciation factored in — not just interest savings.

How this works: We compare three paths for your extra monthly money. The key insight most calculators miss: your property appreciates on its full value, not just your equity — that's leverage working for you. A R1.5M property appreciating at 6% generates R90k/year on your R300k equity, a 30% return on equity from appreciation alone.

Bond Interest Rate (% p.a.) Use prime

Your Marginal Tax Rate (%)

Expected RA Fund Return (% p.a.) 10% is a reasonable SA equity assumption

Monthly Extra Amount to Compare

Comparison Period (years)

Property Current Market Value Appreciation is calculated on this full value (leverage)

Your Current Equity Property value minus outstanding bond balance

Expected Property Appreciation (% p.a.) SA long-run avg ≈ 5–7% • Cape Town ≈ 7–9%

Property vs RA — General Rule of Thumb

Interest savings only (no appreciation). Add property details above to see the full picture.

Marginal Tax Rate	After-Tax Bond Cost	RA Effective Return	Verdict at Prime (11.25%)
18%	9.2%	11.9%	⚖️ Close — extra bond payment slightly better
26%	8.3%	13.5%	✅ RA wins clearly
31%	7.8%	14.5%	✅ RA wins strongly
36%	7.2%	15.6%	✅ RA wins strongly
41%+	6.6%	17.0%	✅ RA wins decisively

⚠️ Exception: If you're within 5 years of retirement, have no RA headroom left, or your bond rate is above 15%, extra bond payments can make more sense. Always consider liquidity — you can access bond equity via access bond; RA funds are locked until 55.

🏘️ Rent vs Buy Calculator

Should you rent and invest the difference, or buy and build equity? The full South African picture — leverage, appreciation, opportunity cost and all.

The key debate: Buying builds equity through principal repayment and leveraged appreciation. Renting frees up cash to invest elsewhere. The calculator shows which path builds more wealth over your time horizon — and by how much.

Monthly Rent (or Equivalent) What you pay now, or would pay for an equivalent property

Monthly Bond Repayment Use the Bond Repayment tab above to calculate this

Deposit (Capital) Your deposit only — this becomes equity. Transfer duty & bond reg costs are calculated separately below.

Property Purchase Price

Current Market Value Optional — if you already own, enter what it's worth today. Appreciation calculates from this value.

Current Remaining Bond Balance Optional — leave blank if buying now

Sunk Costs (Auto-Calculated) These are the buyer's costs that become nothing — they never appear in your equity

Bond Interest Rate (% p.a.) Use prime

Bond Term (years)

Property Appreciation (% p.a.) SA long-run avg 5–7%

Investment Return if Renting (% p.a.) What you'd earn investing the difference (ETF/RA)

Annual Rent Increase (% p.a.) SA average ≈ 5–6%

Comparison Period (years)

The "Throwing Money Away on Rent" Debate

The full picture — because both sides have a point.

✅ Case For Buying

Leverage amplifies appreciation returns
Forced savings via principal repayment
Bond repayment is fixed; rent keeps rising
Asset owned outright after bond ends
No landlord risk (eviction, sale)
Access bond gives you liquidity

✅ Case For Renting

Flexibility to move / emigrate
Lower monthly outlay (often)
No transfer duties, rates, maintenance
Invest the difference at market returns
No concentration risk in one property
Better in declining property markets

💡 SA-specific context: Transfer duty alone on a R1.5M property is R42,000. Bond registration adds ~R25,000. These upfront costs mean buying only wins if you stay for 4+ years. The calculator accounts for this — watch the "breakeven year" line.

💰 RA Tax Saver Calculator 💵 Net Salary Calculator 🏦 Two-Pot Calculator 📊 RA Fee Impact Calculator 📖 Retirement Articles

🏠 Bond Calculator South Africa