Absa has stolen a march in mortgage finance by being the first bank in the country to formalise the early settlement of home loans.
Absa is offering a new homeloan management option, FastForward, which allows you to automatically repay your home loan in less than the standard 20-year period.
On a FastForward account you can determine a fixed period within which you wish to complete repaying your home loan or you can set the rate at which you expect your earnings to increase in the future and escalate your instalments accordingly. With the escalation option you can elect an annual percentage or rand value increase.
Jaco Grobler, a managing executive at Absa, says that, besides offering increased flexibility and choice in determining the term of your homeloan repayments, FastForward results in significant savings in interest payments for you.
For example, if you pay your R200 000 home loan in ten years instead of 20, with repayments escalating at a rate of 13 percent a year, you would pay the bank R178 606 less in interest.
Grobler says FastForward accounts will help customers who don't have the financial discipline to maintain their increased or escalating repayments to achieve their goal of shorter repayment terms.
FastForward offers convenience, since Absa will manage the entire process for you. You won't have to change your instalment debit order every year or battle with complicated calculations.
If you are battling to meet the stepped up commitments, you can return to the original 20-year repayment schedule without paying a penalty (other than the extended interest, of course).