Owning Property and Paying a Bond
Dec 29, 2009 Mortgage Loan
You already have a bond so what do you need a second one for? Simple, you have ideas of expanding or renovating the property and you once again need assistance from the bank. Banks are always willing to help, just know that they will likely charge a high down payment once again.
Banks are in business to lend money, so bonds have always represented a primary service they offer. Holding a mortgage is a way the bank will make a long term profit, because they not only receive money from the individual but also hold the deeds to the property until the loan is repaid in full.
Taking out a new mortgage is a straightforward process, much like the first time you took out a loan for your property.
The only difference is the bank will need to find out the exact reason you want a second bond. With the first bond it was simple, you wanted to own a house or start up a business. With a second bond, you are adding something in addition to your first bond. The bank needs to know your intentions.
The bank must remove itself from a large risk, so the direct deposit is necessary. The deposit allows banks somewhat of a chance to recover damages in case the borrower drops out of the picture.
After you provide the bank with all the details, they will sit down and study your case. The bank needs to decide if you really need the money and if you will be able to pay it off. It’s difficult paying off one bond much less two.
The bank also tends to frown upon second bonds that are intended to help release some capital on the property to a struggling business or to support your own, especially if you are looking to start the business from scratch.
Purchasing and owning property is an experience and right everyone should enjoy. However, it’s also a time filled with doubt and concern. Do your homework and make sure you can afford the bond both now and in the future.
Graham McKenzie is the content syndication manager at BondCredit.co.za South Africans leading Bond Originator
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Tags: Bonds, finance, Homeloans, money, Mortgage Loan, Mortgages
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