With the country in a technical recession, petrol prices continually on the rise and the cost of living forever increasing, South Africans are feeling more financially burdened than ever before. As more of us consider tapping into our credit cards or personal loans to make things easier, or just to replace an expensive appliance that should have been chucked out years ago, a number of us don’t realise that they can access their bond as a financial resource.
According to Timothy Akinnusi, Executive Head of Home Loan Sales and Client Value Management at Nedbank, accessing the funds you have in your home loan is a more affordable option that taking out an unsecured loan. As the money is secured by a fixed asset (your property), the risk is deemed less and so the interest rate is far more favourable.
Before considering borrowing from your home loan, certain criteria need to be in place. Speak to your home loan provider, and find out whether you have access to this facility, and how much you are allowed to borrow. You can only take out as much as you have already paid in, which means for those who have only recently taken a bond out, the amount will be limited.
If these conditions are met, Akinnusi says that the money you borrow can be used for a number of things. “You should be able to access the money which can be used to cover expenses ranging from your child’s education and home improvements to start-up business costs and unexpected car repairs. The choice is yours. You can also consolidate your other debts which will reduce the total interest you pay.”
While this is a viable option for many of us, consumers must remember that it is not a quick fix solution. The interest rate is certainly better, but the money still needs to be paid back and this can prolong the repayment period of your bond. Whether you have one bond, or two because of your rental property, you can borrow from them sensibly.
