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Bond Calculators Bond calculators include various calculators aimed at property finance calculations, but generally also includes a calculator to estimate transfer duties, conveyance fees and bond registration costs. These calculators are available on a number of property related web sites. The main types of bond calculators are:
The basic bond calculator reflects the monthly bond repayment amount associated with a specific property purchase price, bond period and interest rate. Some calculators also reflect the total bond repayments and the total interest incurred over the bond period. The maximum bond amount calculator's aim is to provide the user with an indication of the bond amount qualified for. Generally, the gross monthly combined income of an applicant is used to determine the affordable monthly bond repayment amount. This amount is mostly calculated as 30% of the gross monthly combined income but the implementation of the National Credit Act has required this amount to also be tested against the applicant's net disposable income. The net disposable income is determined by deducting various household and finance costs from the combined net salary (after payroll deductions). If the net disposable income is less than 30% of the gross monthly combined income, the lesser amount should be used. The bond period and interest rate is then applied to calculate the maximum bond amount qualified for. The minimum income calculator determines the required income level associated with a given property purchase price. This is arrived at by applying the bond period and interest rate to the property purchase price to determine the income level required in order to service the bond amount. Generally, the monthly bond repayment calculated is divided by 30% to calculate a gross monthly combined income level, but a more correct approach would be to compare the monthly bond repayment amount calculated with the net disposable income. The increased installment calculator determines the interest saving resulting from an additional monthly bond repayment on top of the required monthly bond repayment. It should be noted that this interest saving is effected over the entire adjusted bond period and does not represent a saving in today's monetary terms (inflation will result in the savings actually being worth less at the end of the bond period). To calculate the present value of the interest saving, the amount needs to be discounted by the estimated annual inflation rate over the adjusted bond period. A transfer and bond cost calculator reflects an estimate of the transfer duties, conveyance fees and bond registration costs associated with a specific property purchase price and bond amount. These amounts are only estimates and could be significantly influenced by the type of property being acquired and the type of financing. Also, bond registration costs could be significantly reduced by negotiating a reduction in fees with financial institutions or bond originators. Investment Return Calculators Bond calculators are available on a number of web sites, but accurate investment return calculators are not as common. The reason is probably the number of variables which influence investment return and the complexity of these calculations. Care should be taken when using investment return calculators because the omission of important variables or the lack of calculator flexibility could lead to inaccurate calculations and contribute to incorrect financial decisions. We recommend that a comprehensive property software solution should be used to calculate and measure investment return. The Property Reality software covers a wide range of calculation scenario's and also provides the functionality to measure actual investment return. |
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