Refinancing your bond

If you would like to free up some funds to do renovation to your property, add an extra room or pool you can utilize the second bond option which is available from most banks. The second bond option is a bond that is registered over your existing property but is only applicable when there is sufficient security value in your property to cover the amount.

Things to remember:

When you apply for a second bond there are certain costs that will be incurred again such as the valuation fees by the bank assessor and the legal fees that are involved in registering your bond. There are two ways of using your second bond either you can access your enhanced value of of your property or you can or the increased value of your home through improvements or extensions to your property.

The same criteria that applied to the application for your first bond will apply to your second bond. The repayments should not exceed 30% of your income or joint income and only residential properties may be refinanced with a second bond.

• A second bond is a cost effective way to finance other purchases as the interest rate on a homeloan is generally substantially lower than most other types of finance.
• When building funds are paid out in intervals.
• The funds from a second bond can be used to finance anything from renovations to holidays and education.

Another way that you can free up extra funds is to switch your bond instead of applying for a second bond. The way this works is that you find a better bond option, on approval of your better bond option application the new bank will pay off your bond at your existing bank and you will now owe the new bank the outstanding amount, however you can apply for a larger loan than what is still outstanding. You are only eligible to switch bonds after six months at your original bank.

However just as the second bond there are some costs involved in this process:

• Initiation Fee:
  Administration fee that is charged by your new bank
• Bond Registration Fee:
  Attorney's fee, which is usually a percentage of the registered home loan amount.
• Valuation Fee:
  The fee payable to the assessor who valuates your home.
• Cancellation Fee:
  Administration fee payable to your existing bank upon cancellation.

The most important thing when considering to switch your bond instead of taking out a second bond is the interest rate that you will be getting. Remember that there is no point moving your bond and paying a lot of costly fees if the interest rate is not better. To get the best interest rate you can use the services of bond originators. Bond originators are the middle man between you the borrower and the bank the lender. Bond originators can negotiate the best interest rates for you and can save you time by do the application at the banks for you.

CKM Homeloans is a bond originating company that can assist you with all your homeloan needs from a second bond to switching mortgages to first time homeloan applicants. Contact CKM Homeloans today to eliminate stress from the homeloan process.