a Further Loan against your existing property

A further loan / second bond is usually beneficial for those homeowners who bought their property a while ago. Say for example you bought your home five years ago for R500 000 and the home is now worth R 800 000, you will be able to take a further loan for the amount of R 300 000. Homeowners who are bond-free can also refinance their properties to raise some capital.

When applying for a further loan / second bond, your home will be appraised to determine its value and your credit file will be reviewed. The bank or lender will order a title report on your property to search for any liens that might appear. If the bank or lender is satisfied with all these items, the loan is likely to be approved.

Unfortunately, there will be costs involved in taking a further loan. These costs include second bond registration costs, conveyance fees and the appraisal fees. The total of these costs is usually only about 1% of your total loan amount, but must still be kept in mind. Your monthly instalments will become bigger, so make sure you can afford it before you apply for the loan.

It is advisable to use further loans for funding additional investments on your property, as this will improve the value of your property even more. With the property market in South Africa at this stage, you never know if your property’s value will rise or fall in the next few years. Your property’s value might have grown from R 500 000 to R 800 000 in the past few years but it might depreciate in the next few years, leading to negative equity.

Further loans can be used to finance renovations to your home, but some homeowners use the money to buy new cars, consolidate their debt or for other capital expenditure. This is one of the cheapest ways to access finance because home loan rates are typically the lowest of all other financing methods.

We will give you free advice on the questions you might have about the costs associated with further loans and we can help you understand the personal financial planning implications of a further loan. We will also be able to renegotiate the interest rate you are currently paying on your home loan as your loan-to-value ratio improves.

Benefits of applying for a Further Loan against your existing property

• You get fast access to a loan
• To release cash tied up in the value of your house
• Access to cash when you need it
• To use surplus cash released to reduce other expensive forms of debt
• You benefit from a low interest rate
• To restructure your home loan over the maximum period to reduce monthly cash flow
• Easy to manage

Please contact us if you require any further information or would like to apply for finance:

Complete this short form online

011.327.4489 / 0861 1111 93

morne@mortgagepluscc.co.za

www.mortgagepluscc.co.za

Question and Answers regarding Home Loans in SA

Q: I am in the process of buying a home and require a bond. My first thought was to apply directly with my bank, however a friend told me about something called Mortgage Origination. What is Mortgage Origination and why do I need a mortgage originator?

A: Mortgage origination is the business of negotiating a home loan with a bank on behalf of a prospective property owner. Mortgage originators give you independent advice on choosing a home loan and help you obtain it without the hassle of doing all the legwork yourself. Some originators, like Mortgage Plus, offer services that may help a buyer, like advice on estate agents in the area, how to complete the sale agreement, etc.

Because your home purchase is probably the most expensive one you’ll make in your life, the home loan itself is an important financial decision and the benefit to be gained from making the correct choice can amount to savings of hundreds of thousands of Rand over the life of the loan.

Q: I am confused. What is a Variable Rate Loan vs. a Fixed Rate loan?

A: With a variable rate loan, your interest rate is linked to the base home loan rate which moves up and down depending on market conditions. If the base rate decreases by one percent, so will your interest rate, and of course if the base rate increases so does your home loan rate.

With a Fixed Rate Loan however, your interest rate is fixed for a specified period, generally between one and two years and is generally slightly higher than the base home loan rate when the loan is taken out. A fixed rate loan protects you from rising interest rates and gives you the certainty of knowing exactly what your payments will be. Bear in mind however that it does not allow you to benefit from any decreases in the interest rate over the fixed period.

Q: My husband and I are expecting our third child so we are in the market to buy a new, bigger home but with the current interest rates and uncertainty in the property market at the moment, we really need sound advice on whether to buy a new home, build from scratch or renovate our existing home.

A: Whether you are buying an existing home, building a new one or renovating your current abode, taking the first steps towards home ownership is a daunting prospect. Take heart – no matter how intimidating that mountain may appear, scaling it will always be easier with sound advice.

Property’s primary law is position – the area in which the home is located and the market value of the homes within that suburb. Discussing the prospects with family and friends around the braai or the dinner table provides a valuable perspective on the intangible elements of local amenities, community living or double-storey homes when there is a new baby in the crib.

Building and renovating carries the guiding principle – do not over-capitalise the property relative to the neighbours. Simply put: building or extending the property into a five-bedroom mansion with an Olympic-size swimming pool in an area where the bulk of properties have three bedrooms on small plots is not economically sensible.

Conversely, renovating the smallest property in a prime area promises a long-term return that more than compensates for the renovation costs. Essentially, bathrooms and kitchens sell properties so upgrading those assets substantially improves the home value.

There is no substitute for professional advice. Mortgage Plus  is one of the country’s top mortgage originators and offers free advice to home owners and buyers. Whether buying, renovating or building, our consultants can guide you through the process step-by-step, complete the paperwork and arrange and negotiate with the banks a finance package to suit your individual needs.

By choosing Mortgage Plus for a loan, you will get professional advice to make sure you are getting the best deal possible.

CONTACT US

Speak to a home loan consultant about financing your new property or reviewing your existing mortgage. We are able to assist in lowering your bond repayments and securing attorney discounts.

Complete this short form online
Call us on 011.327.4489
Email: morne@mortgagepluscc.co.za

www.mortgagepluscc.co.za