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Access bonds, re-advances and further loans explained
An access bond lets you pay extra into your home loan and draw that money out again later. A re-advance returns money you have already paid in above your required instalments. A further loan is a new loan on top of your existing bond. They sound alike, but they work differently and carry different risks.
Access bonds
An access bond is a home loan with a facility attached. Money you pay in beyond the required instalment reduces your balance and your interest. If you need it, you can take that surplus back out, within the rules of your bank, without applying for a new loan.
Think of it as a savings account that sits inside your bond. While the money is in the bond, it saves you interest on the loan. Compare that saving with what a savings account would pay you.
Ask the bank:
- How do I draw money out, and how fast is it paid?
- Are there limits or fees for withdrawals?
- Is the facility included in my bond, or must I ask for it at the start?
- Does the bank change the interest rate or the terms if I use the facility?
These details differ from one bank to another.
Re-advances
A re-advance means the bank pays out an amount you have previously paid over and above your normal instalments. If you paid R50 000 extra over two years, you may be able to ask for some or all of that back, depending on your loan terms.
It is not a new loan. It is your own surplus returning to you. The bank decides how it handles requests, and some will assess your finances again first. Some re-advances are quick and simple, while others involve paperwork or a fee, so check before you rely on it as your emergency fund.
If you pay extra into your bond, find out whether you can get it back. Our guide on paying extra into your bond explains the savings.
Further loans
A further loan is extra borrowing, for example to renovate or add a room, secured by the same property. It is a new credit agreement. The National Credit Act requires every lender to check that you can afford new credit, so the bank will look at your income, your debts and your credit record, and may value the property again.
Costs can apply. Some banks charge an initiation fee. Increasing the bond amount registered against the property may also involve legal and Deeds Office costs, so ask for a written breakdown before you accept. See bond registration costs explained.
If you are married in community of property, your spouse must consent in writing to a bond or credit agreement, and the consent needs two witnesses. Ask the bank what it needs from you.
The risks of easy access
Having cash available is helpful, but it can tempt you. Be careful of these traps:
- Spending on things that lose value. Using your bond to pay for a holiday, a car or daily expenses means you pay interest on that spending for a long time.
- Never finishing the bond. Withdrawing as fast as you pay in keeps you in debt.
- Your home is the security. If you cannot pay, the bank can take action against the property.
- Rates can rise. If your bond has a variable rate, the cost of money you have borrowed may increase.
Treat the facility as an emergency buffer and a way to improve your finances, not as income. A sensible rule is to withdraw only for items that add value to your home or your income, and to repay quickly.
Which is right for you?
- You pay extra regularly and want flexibility: ask whether your bond allows re-advances.
- You have a lump sum and may need it again soon: an access bond can suit you, if the terms are fair.
- You need a large sum for renovations: ask about a further loan, and compare it with other options.
- You are applying for a bond now: ask each bank what facility it offers. A bond originator can compare these for you.
What to do next
Read your loan agreement and look for the words access, re-advance and further advance. Then ask your bank what it will let you do and what it costs. Use the extra bond repayment calculator to see what extra payments save, and the bond repayment calculator to see how any new loan changes your instalment.
This article is general information for South African readers, not legal, financial or tax advice. Rules and rates change, so check your own situation with an attorney, your bank or a tax practitioner. Our property calculators can help you work out the numbers.