[TSO/ISPF]

Originally Posted by retiredguy123

It is very complicated. There is no discount for the principal amount of the bond. The interest is calculated against the loan on October 1 for an entire year in advance, but it is paid to the lender in two equal installments. For homeowners, if you pay off the bond by September 16, you will save a year of interest. If you pay off the bond after September 16, but before March 21 of the next year, you will save 50 percent of the annual interest. If you pay off the bond after March 21, you will still pay the entire annual interest amount. The bond also has an administration charge. If you pay off the bond by July 17, you will eliminate the administration fee for a year. There is no proration of the administration fee. You cannot make partial payments of the principal. I "think" I got that correct.

If you are convinced you are going to stay in the home you have purchased for a few years I think paying the bond off makes sense. Our bond had a balance of 18K and had been paid down for 10 years. The interest and admin fee was just over 1200 dollars this year. I don't like paying interest if I don't have to and the fact that you can't make additional principal payments against the bond really forces you to pay a lot of interest for the life of the bond on the home. It depends on your circumstances financially I suppose. We are in district 8. You can look up the costs online.
IE: https://www.districtgov.org/departme...Unit%20159.pdf