Upside down house?

Upside down house?

What? Upside down house, you ask? It seems that lockdown may have affected our thinking surrounding our property investments and it may even feel like our worlds (or our property investments) are currently upside down.

The question remains for many property owners…should they apply to refinance their home mortgages, by extending the payment period on their current bonds, applying for a second bond or payment holiday, or converting to an access bond?

Relief given now, in the form of payment holidays or reduced monthly payments, will probably be factored into extended payback periods and interest on the sums involved. When considering this, ensure you discuss the terms and conditions with your bank, including the short- and long-term effects.

Many property owners also don’t realise how much equity they have in their homes due to the strong property price gains over the last few years. Therefore, even those who don’t have bonds over their properties can now finance their properties to raise capital. This is also cheaper than a personal loan or conventional vehicle finance, as home loan rates are usually lower than these.

Important things to consider when applying for refinancing – the home will have to be revalued, applicant’s credit history and affordability for the additional finance will also have to be reviewed. If the homeowner is borrowing a portion of the original home loan or accessing funds registered for future use, the funds will be made available immediately after approval by the Lender, and a second bond over the property does not have to be registered in this case.

In cases where a further bond is registered over the property, keep in mind costs applicable to such refinancing which are: the bank’s initiation fee, The Deeds Office Registration Fee and Attorney fees to attend to the registration. The costs however are ordinarily less than one would expect to pay for the first bond as the amount of a further bond is usually much less than that of a first bond.

For advice on property related transactions or bond registrations, please contact Yolandi Hortnagl, our Head of Conveyancing at Louw & Coetzee Attorneys and LDB Attorneys.

By Alet Smit | Attorney & Group Marketing Head