Access bonds: Here’s everything you need to know

Article summary

• Paying extra into your bond each month saves you in interest over the long term. An access bond allows you to do this, while still having the option to withdraw that money if you need it.
• The access bond only allows you to withdraw from the additional money you paid into the bond, not from the standard monthly repayments.
• You can apply to have a normal bond converted into an access bond at any stage during the term of your home loan.

Aside from being one of the most valuable investments you’ll ever make, a home loan can also provide an effective method for managing your funds. In fact, with the help of an access bond, your home loan can function effectively as a savings account at the same time, with all the benefits that go with that.

What is an access bond

An access bond is a type of home loan that allows borrowers who have paid extra money into their bond to withdraw the extra money should they need it.

This means that homeowners can benefit from paying interest on a smaller capital amount while the surplus funds are in the bond, but can access the money if they need it.

Extra repayments save you money in the long-term

Why would you want to pay more than the monthly repayment amount? Because it can save you significant costs in the long term by reducing the interest you will have to pay.

Use our Extra Bond Payment Calculator to determine how much you can save with extra repayments.

Access bonds provide you with this benefit while also giving you the option to get back those funds if you really need them.

How much can you withdraw from the access bond?

Bear in mind that only the extra amount you’ve paid into your bond can be accessed, not the monthly repayments themselves.

In other words, if your monthly bond repayment amount is R8 000, and you pay R8 500 over the course of 10 months, you can withdraw R5 000 from the access bond (500 x 10).

If you wish to increase your access bond facility, the bank will be required to do a full risk assessment as required by law to ensure that you are not over-indebted.

Effective ways to use your access account

• Deposit surplus money into your home loan account as you are, in effect, saving at the rate of interest of the loan without paying tax on the interest saved, which is almost certainly more than you’d be guaranteed anywhere else.
• Deposit your salary into your bond account and transfer sufficient funds into your current account to cover all your deductions like debit orders and your household expenses. Any surplus funds remaining from your salary will reduce the interest charges on your bond.

How do I get an access bond?

All banks offer access bonds. You can either have the facility incorporated into your home loan when your home loan finance application is approved, or you can make an application for this facility after your bond has been registered.

You can also apply to have a normal bond converted into an access bond at any stage during the term of your home loan, provided that your home loan has been well conducted and you are not under debt review.

Find out what you can afford

Before applying for a bond, it helps to know what you can afford, so you can house hunt within your price range.

Pre-approval with ooba Home Loans assesses your financial situation and provides a solid estimate of what you can afford.

You can get pre-approved by contacting an expert at ooba Home Loans or by using our free, online pre-approval tool, the Bond Indicator.