Access bonds: a guide for South African homebuyers

If you're looking to apply for a bond in South Africa, you've probably come across the term "access bonds." But what exactly is an access bond, and how does it work? In this article, we'll explain what access bonds are and help you understand their advantages and disadvantages. This will help you decide if this type of loan is right for you.

What is an access bond?

An access bond is a type of home loan that allows you to withdraw money you've already paid into your home loan. In simple terms, it's like a flexible loan where you can make extra repayments and, if needed, access that extra money in the future. This could be especially useful if you need cash for unexpected expenses, renovations or any other financial needs. The amount you can access is the extra money you've paid beyond your regular monthly bond repayment.

For example, if your bond repayment is R10,000 a month, but you’ve been paying R12,000. The extra R2,000 will be available for you to access whenever you need it. This goes up to the total amount of extra payments you've made.

Advantages of an access bond

Flexibility
One of the main benefits of an access bond is the flexibility it offers. You can pay extra into the bond when you have surplus funds and, if necessary, withdraw that money later. This gives you control over your finances and makes it easier to manage cash flow.
Lower interest costs
By making extra payments, you reduce the outstanding balance on your home loan. This can help you pay off your bond faster and save on interest in the long term because interest is charged on the outstanding balance.
Emergency cash access
An access bond can act as a financial safety net. In times of financial strain, you can tap into the extra payments you’ve made, without needing to apply for a personal loan or credit card, which often come with higher interest rates.
No need for re-application
If you need to access the funds, you don’t have to go through a lengthy loan application process again. The money is already available in your home loan account, making it quick and easy to withdraw when you need it.

Disadvantages of an access bond

Temptation to overspend
While having easy access to extra funds can be helpful, it can also be tempting to withdraw more than you need. If you’re not careful, this could result in you taking on more debt and potentially undoing the benefits of making extra repayments.
Higher risk of not paying off your bond sooner
Although you have access to extra funds, it could be easy to fall into the trap of borrowing from your bond rather than using it to pay off your loan faster. This could delay your bond repayment and end up costing you more in interest over time.
Limited access based on extra payments
The money you can access is limited to the extra payments you've made into the bond. If you haven’t paid extra, your access to funds will be limited.

An access bond can be a helpful tool for homeowners who want more flexibility with their home loan repayments and the ability to access extra funds in case of emergencies. However, it requires discipline to avoid overspending or falling into the trap of borrowing too much from your bond. If used responsibly, it can help you manage your finances more effectively. You could even save on interest in the long run.

Before getting an access bond, make sure to talk to your home loan consultant. They will help you understand how an access bond could work for you based on your specific needs and financial situation.

Get started

Homebuyers guide

Preparing to buy a home

Finding the perfect home

Making an offer

Getting a bond

Owning it

Property Brief