Home Loan Talk – Access Bonds

Private Property South Africa
Justin Clarke

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


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.

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