If you are looking at applying for a Readvance or second bond as it is know, then this article should help prepare you.

What is the Meaning of a Loan to Value Ratio?

A Loan to Value ratio means that your home loan amount is equal to the value of your property. There are instances where a bank will advance you a loan of more than 100% of the value of the property, in which case you may qualify, for example, for a 108% home loan, which includes the conveyancing costs, transfer duty, and so on.

What is a Readvance?

When a portion of your home loan is repaid, you can borrow all or part of the repaid amount again, without having to register another bond, however your property, as well as your financial stability will be re-assessed. This comes in handy when you want to renovate, add on or improve your home. Your financial institution will insist on seeing the following documentation when you apply for a readvance:

Proof of permanent income;

A detailed quotation of your proposed alterations;
Approved building plans (if applicable).

What it Means to Have a Second Bond on Your Home.

This is also referred to as a further loan. It is an additional loan registered on an existing home loan.

Provisions for a second bond are that the value of your property has increased to at least the amount of your original loan plus your proposed further loan combined, and that you can afford the new repayment.

       
 

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