Manage your money better with an access bond.
Most banks offer a home loan package with some form of access facility,
providing you with instant access to the cash you already have invested in your
home. The difference between the value of your home and the amount that you owe
the bank is the EQUITY in the property. Equity can be as a result of paying in a
deposit, or through the appreciation in value of the property, or even the
savings that you have invested in your home loan by paying it off at a faster
It is always advisable to request an access facility when applying for a home
loan. These are some of the benefits:
Convenient cash electronically
Most banks offer access to your equity in the property via internet
banking or even from an ATM, which makes accessing cash very convenient and
High interest savings
By depositing your savings into your home loan account, you can enjoy
tax-free savings at the prevailing bond rate that you are eligible for at
that particular point in time. Take a good look at the interest that you
earn in your savings account and compare it with what the bank charges you
to lend that money back to you. Then consider that you will also pay tax on
the interest that you have earned in your savings account.
Short- and medium-term finance (cheap credit)
You have flexible access to equity in your home loan for those
high-value items that traditionally you would have financed through
hire-purchase, lease or rental agreement. Advantages include flexibility
i.e. you could pay your car off over 20 years and save on interest.
Repayments are calculated at the bond rate that you are enjoying, which
could be as much as 5% lower than lease or HP rates!
An easy line of credit
Let's assume you already make use of the full value of your access
facility. Remember that when you were granted the home loan the bank looked
both at what you earn, which shows that you can afford the facility, and the
current value of the bond granted. If your situation has improved since the
bond was granted, you can re-apply and client-activated access will be
granted to extra funds.
There is often some confusion about this product that should be explained.
The best way to illustrate this is by example of a conventional access facility:
You have purchased your home for R550 000.
You only need R400 000 to buy your home because you have the balance of
the funds in cash.
You register the full amount of R550 000 and request a client-activated
access facility, giving you access to the equity.
The bank granting the home loan will calculate affordability at the
higher amount of R550 000.
The conveyancing attorney will be instructed by the bank, and you will
have access to the facility on registration of the bond.
You will only be charged interest on the amount paid out on
registration, and bond repayment is based on amount paid out.
You now have flexibility with your repayments - you can double the bond
repayment, but still have access to that 'extra' cash.
Even if you are applying for a home loan for 100% of the value of the
property, or you don't qualify because of affordability, you can still provide
for FUTURE USE.
Let's assume you have no equity, but need funds to do alterations as soon as
You must ensure the extra amount is registered simultaneously with the
registration of the bond. This will not affect your repayments as the monies
are not paid out.
When you need to access the funds you will still go through a similar
re-advance approval process with the same forms and proof of earnings. The
bank needs to assess your ability to service the additional amount.
We assume that your property has not yet appreciated to the point where
the bank finds more value, but the bank's valuer will look at the plans and
quotes that you have obtained to assess if the improvements will add value
to your home.
If the valuer is satisfied and you are able to afford the new amount, it
is activated immediately; the higher bond value is already registered with
the deeds office, so there is no delay or further costs.
If you require any information about mortgage lending, our consultants will
be glad to assist you.