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You can use a further loan for anything you like, but keep in mind that there are two types - ordinary and building.
How long does it take?
The good news is that it is usually quicker to finalise a further loan than a new bond because there is no transfer involved.
What does it cost?
It is important to understand the costs associated with a further loan, and to be aware of the consequences of not keeping up with your repayments.
A further loan requires another home loan to be registered, so there will be valuation fees and bond registration costs, etc. Make sure you budget for these. Keep in mind that in some cases the interest rate could be adjusted, so do not assume it will be the same as the original rate concession you received from the bank when your existing home loan was approved.
A further loan is secured and granted against your existing property, so make sure you can afford the additional payments that come with it, otherwise you risk losing your property, which could cost you dearly.
Debt consolidation
If debt consolidation is your main priority, you may want to look at other options than doing it by way of a further loan on your existing home loan. It is true that you would most likely get a lower interest rate on your further loan than on a personal loan, but in the long run you could end up paying a lot more. Ask your financial advisor to do these calculations for you and compare carefully before deciding to use a further loan for debt consolidation.
Homebuyers guide
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