Overview of the Old Mutual Zero Interest Loan (RSA)

Old Mutual offers a distinctive zero interest loan to South African residents who have an active Plan/Savings Benefit. Unlike standard personal loans, this facility allows you to access funds while maintaining your investment or premium schedule. The standout highlight is the absence of any interest charges — you repay what you borrow, nothing more.

The available loan amount is restricted by both regulatory guidelines and the specific plan details. Notably, several factors might limit the borrowable amount, including your plan’s addendum and your compliance with the Long-term Insurance Act. Repayments can be made at any time, in full or in instalments, entirely in South African currency.

This product is designed with flexibility in mind. Old Mutual allows you to reduce your balance or settle your loan early without incurring penalties. However, you remain responsible for administrative or amendment fees if applicable, and the company reserves rights on disbursement and repayments as specified in their terms.

How to Apply: Step-by-Step Guide

1. Ensure you are an Old Mutual Plan/Savings Benefit holder and your benefit is not pledged or ceded.

2. Complete the loan application accurately, confirming your compliance and financial standing.

3. Submit all required supporting documents, particularly proof of address and identification.

4. Review and agree to the amendment of your plan’s terms related to no cession or pledge until the loan is repaid.

5. Wait for Old Mutual to process your request. Approved funds may be paid in multiple instalments if clearance is pending on recent payments.

Key Advantages of the Zero Interest Loan

This loan stands out due to its zero percent interest rate – you only repay the principal.

There are no penalties for settling your loan early; you can flexibly repay at any time in ZAR.

The application process is straightforward for existing plan holders with clear criteria on eligibility.

This facility allows you to continue your premium payments or ad hoc investments without disruption.

Joint applicants bear joint and several liability, which can add security or access flexibility for multiple parties.

Potential Drawbacks

Maximum loan amounts are strictly regulated and might not be as high as some borrowers expect.

Administrative or plan amendment fees may apply, reducing the effective net benefit of taking a loan.

Loans are only accessible if your savings or investment product is eligible and unencumbered.

Restrictions on frequency of borrowing may limit flexibility, especially in the first five years of the plan.

Old Mutual retains discretion over fund release timing should recent debit orders require clearance, potentially slowing access to funds.

Verdict: Should You Consider the Old Mutual Zero Interest Loan?

The Old Mutual Zero Interest Loan (RSA) is a solid choice for existing policyholders needing short-term liquidity without enduring interest costs. Its simple fee structure, flexible repayment, and regulatory safeguards make it a worthy consideration for disciplined borrowers who understand the conditions. However, be mindful of strict loan ceilings and the terms that protect both Old Mutual and your long-term savings.