What is an Access Bond?

An Access bond is an efficient way to manage money facility which primarily focuses on home loans. Paying more than the agreed instalment into your home loan will make you pay off your loan faster resulting to savings in interest payments. Home loans with access bond will enable you to withdraw excess funds intended for your home loan.

Access bond facility is offered by all banks; they may call it in a variety of ways but still has the same mechanics. If you did not include this facility prior to your loan application you may do so anytime. The bank will run full assessment of your credentials and evaluate if you are qualified.

The current economic crisis and surging interest rates affecting the whole world has forced South African banks to limit their credit approval and made some changes in their access bond facility and home loan account procedures. It would be best if you could check with your local bank.

You may have access to your accounts electronically once approved; this is made possible by linking your access bond or home loan account to your current savings account. You will then have the flexibility to move your excess funds from your access bond to your other accounts. The significance of an access bond is that it acts like a saving account. For instance you are paying the prevailing 15.5 percent on your home loan; the money you pay beyond that on your bond will enable you to save 15.5 percent making this facility a good investment.

Your salary may also be deposited into the bond account enabling you to save as calculation for the interest on home loan is on a daily basis. You will then be able to transfer money to your current account to cover for the months necessities at the same time you save interest and pay off your home loan efficiently. The system is similar to paying in advance, where you also save for interest the difference is any funds in excess may be used for purposes as you intend.

Take note that the calculation of interest on a home loan is on a daily basis if you withdraw from your bond more than you should your interest for the next month will be higher. The access bond is a financial management facility so when making use of this privilege you must consider savings and more on deposits rather than withdrawals.

It is not easy to save and at the same time spend, so to make this facility effective you must think of other ways and means to raise funds or extra income. You must always think ahead and a top priority should be how to add funds to your access bond; because the only way where you could make or maximise the use of access bond is through savings and extra fund generation. The object of your savings should be focused on increasing the deposits on your bond and find ways to generate additional funds for your day to day spending.