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Getting a Second Bond – Application Success

Second bonds or further loans, is money that you loan on top of the original bond amount, based either on what you have repaid in the capital amount or an increase in the value of your property, or a combination of both.  If your second bond or further loan application is accepted you can use this money for basically anything from home renovations to buying a new car to paying your child’s school/university fees.

apply-for-second-bondA second bond is making a loan on the money that you have already paid for on your existing bond.  The difference the amount originally registered over your property and the current balance can be made available for your use should your bank see you as a good risk (Your payment history will be one of the determining factors in this).  It generally takes a good couple of years of paying interest or if you are very lucky your property value will have increased significantly, before a usable amount will be available to claim on from the capital amount.

The procedure is very similar if the value of your home has increased and you wish to increase the amount of your original home loan.

It is important to note that you may also make use of a bond originator to make the application on your behalf. This can often take a lot of the headaches of dealing with a bank directly out of the equation and help to speed up the process as the bond originator will not make the application unless he feels your chances of success are very good.

Documentation required for application (The financial institution may request additional documents)

Employed applicants with a fixed monthly salary

  • A copy of your ID
  • Most recent Payslip
  • 3 months bank statements
  • Statements of your personal assets and liabilities
  • A personal monthly expense statement
  • A copy of your water and lights account
  • A bond statement

Employed applicants with a Variable income

  • A copy of your ID
  • Latest 6 months consecutive payslips
  • 6 months bank statements
  • Statement of your personal assets and liabilities
  • A personal monthly expense statement
  • A copy of your water and lights account
  • A bond statement

Self employed Applicants

  • A copy of your ID
  • Letter from auditors to confirm income
  • 2 years financial statements signed and audited
  • 6 months personal banking statements
  • 6 months business banking statements
  • Statement of your personal assets and liabilities
  • A personal monthly expense statement
  • A copy of your water and lights account
  • A bond statement

The Qualifying criteria to apply for a second bond/further loan are:

  • You must have an existing home loan account
  • Your home loan payments must be up to date and have a good track record of payments
  • There should be sufficient equity in the property
  • You have to qualify for the extra amount that you require from an affordability perspective
  • You cannot be on ITC, and you must have a good payment record.
  • The second loan/further loan will be done as per the normal home loans procedures for the credit approval.

Legal Entities

  • Copies of Id’s for all the members, trustees or directors
  • The minimum documents required as mentioned for Employed and self employed applicants
  • The companies registration documentation / the trust deed / and the articles of association
  • 2 years signed and audited financial statements.

We have only mentioned the bare minimum requirements and should the bank need additional documentation they reserve the right to request it but with the above guideline you are well on your way to application success, but above all, be very honest with yourself and ask the question, “Can I really afford the additional payment?”

If you are not 100% sure that making the extra commitment will be easily affordable, try using the debt reduction calculator that will help you determine which debt to reduce and pay off before you increase your bond payments.

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