An access bond is an amazing way to save money and build up reserves for an emergency fund. Most people around the globe are always looking for ways to save money, especially in real estate.

Access Bonds are one of the many ways to utilise your home equity wisely! This post explains what exactly is an access bond, and the different offerings by South African Banks.

What Is an Access Bond?

An access bond is a type of home loan that allows borrowers who have paid extra money into their bond to withdraw the extra money should they need it.

How Do I Get an Access Bond?

Once your home loan is in place, you will need to apply to the bank to have the access bond facility activated. The bank will most likely require you to have a savings or business account with them.

The access bond facility can either be added to your home loan when first approved, or you can apply for the facility once your bond has been approved.

The key to having an access bond is to build a surplus amount over and above your bond’s required monthly instalments. This can be done by paying slightly more than your minimum monthly repayments.

Advantages of Access Bonds

• Accessibility to get cash from the account any time.
• Lower the daily interest rates of your mortgage.
• If you don’t ever use it, the additional amount will assist in managing your monthly bond repayments and will help to pay your home loan off sooner: a win-win situation.

Disadvantages of Access Bonds

• Every time you get cash from your account, it turns your home into collateral. It reduces the equity of your property.

Types of Access Bonds

Access Bonds are similar. They allow you to deposit money into your home loan account as and when you have any available, then you can withdraw the surplus funds whenever you need it in case of an emergency or unforeseen expenses.

Most banks offer this service, they have different charges and terms and conditions. It’s important to speak to your financial advisor so you can understand the different kinds of access bonds and which is most beneficial for you.

Absa Access Bond

Known as the FlexiReserve, Absa also allows you to withdraw any extra money you’ve paid into your home loan over and above your monthly repayments. Your extra payments will reduce the size of your loan while they are in your account. Then, if you ever need cash in a hurry, you can withdraw it. Additional funds paid in will not automatically lower your monthly repayment.

FNB Access Bond

FNB offers a  Flexi Option provides the ability to deposit surplus funds and further allows electronic access to these funds 24 hours a day. Your monthly instalments remain the same throughout the term of the loan, so surplus deposits remain available.

Nedbank Access Bond

NedRevolve is Nedbank’s facility on your home loan that enables you to access any surplus funds that accumulate when you pay more than the minimum instalment or a lump sum into your home loan account. With Nedbank, your monthly instalment gets adjusted and is recalculated monthly where additional funds have been paid in.

Standard Bank Access Bond

The Standard Bank Access Facility gives you:

• Inexpensive loan option: Generally, a home loan is a relatively inexpensive loan option as it’s a secured loan with low-interest rates, making it a far better borrowing option than any other short-term loan.
• Access to loan capital: Once you have access to the additional funds, you can use it to cover any other expenses, from home renovations to a large hospital bill, instead of having to go through a costlier short-term loan.