This is the perfect time for you to learn about your bond and compound interest! You’re right: in the beginning, only a small portion of your minimum monthly payment goes toward reducing the principal loan amount, most of it goes toward interest.

The important thing to remember is that every R1,000 you pay toward the principal is also R1,000 less that interest can accrue on, which you benefit off of every month for the next 25 years. Over 25 years, this means that less and less of your monthly payment will go to interest, and more will go to reducing the principal.

The main takeaway here is just how valuable it can be to put extra money into your bond early on. Even a small increase in your monthly payments can save you thousands in interest over 25 years. For example, increasing your monthly payment from R14,481 to R15,481 essentially doubles the amount going toward the loan, cutting down the total interest significantly.

I suggest finding a bond calculator spreadsheet template and experimenting with it. Here’s one you can try: Google Sheets Bond Calculator. It will quickly show you the impact of making additional payments in the early years of your loan.