What is a Bond? Start here…
If you wish to purchase property, either for a home or business, you are almost always left with no choice but to take out a bond. Bonds are also known as mortgages, and chances are unless you are living under a box, you are well aware of the recent mortgage crisis.
Banks are in business to lend money, so bonds have always represented a primary service they offer. Holding a mortgage is a way the bank will make a long term profit, because they not only receive money from the individual but also hold the deeds to the property until the loan is repaid in full.
Taking out a new mortgage is a straightforward process, much like the first time you took out a loan for your property.
The only difference is the bank will need to find out the exact reason you want a second bond. With the first bond it was simple, you wanted to own a house or start up a business. With a second bond, you are adding something in addition to your first bond. The bank needs to know your intentions.
The bank must remove itself from a large risk, so the direct deposit is necessary. The deposit allows banks somewhat of a chance to recover damages in case the borrower drops out of the picture.
Bonds are intended for the long-term, with a minimum of ten years required, and generally running more in the twenty to thirty year period. People who apply for mortgages for the first time must display a steady employment and pasty financial stability for at least a few years.
Banks who issue bonds are entitled to ask for banks statements and details of income of both parties in the case of a joint bond against a property. You have no option here. While you may not like disclosing your personal information, the bank must closely examine and judge whether or not you can afford the bond.
Purchasing and owning property is an experience and right everyone should enjoy. However, it’s also a time filled with doubt and concern. Do your homework and make sure you can afford the bond both now and in the future.
Graham McKenzie is the content syndication manager at BondCredit.co.za South Africans leading Bond Originator