A second bond is normally used for making repairs or upgrades to the property. You are able to use the second bond for anything you want, not just home improvements. Seconds bonds are used for sending children to college as well as for eliminating high interest debt.
Second bonds are based solely on the properties equity. Be careful about removing home equity for the wrong reasons. You have to keep in mind that you will be paying interest on this money you have accumulated. If you are planning to make improvements on the home or to do some needed repairs then you will be increasing the home equity. If you use the loan for any other reason you are simply losing the equity you built and will leave yourself no easy way to build new equity.
If you used the homes equity to pay student loans or to take a vacation then it is lost forever. You might find that upon selling the property that after closing you walk away empty handed. The point of owning a home is that it is an investment, so treat a second bond as an only if completely necessary option. If the home needs a roof or you would like to add a room then the 2nd bond would be increasing equity in the home and would be a good investment move.
You primary mortgage company is not your only choice. You can shop around for the best rates from many banks, credit unions, or even other mortgage companies. Just like your primary bond the 2nd bond will have terms and other features to the quote you need to have specified by the lender.
Most places have slightly higher interest rates for secondary bonds. You may also find that some companies will offer you 100% of your equity as available for lending while others normally allow 85% or less. Be very cautious of the 100% lenders as they will have much higher interest rates and you also are using all your equity that took years to build.
The lender will require an appraiser to come out to evaluate the property first hand. The lender then uses the information gathered from the appraiser to figure out what the actual homes value is and what is available for lending through its equity.
The appraiser will look at the homes over all quality as well as surrounding homes that are similar. You need to make sure that you have the home in the best possible shape you can in order to gain the highest appraisal. If the appraiser walks up to your home and finds a deck that is falling apart or gutters that are hanging you will lose hundreds of dollars of the homes equity amount.
Make sure you inform your lender as well as the appraiser of any improvements that are being made. You want them to be able to assess the property as is but also to look at the value of what it will be once improvements are complete.
Second bonds are based solely on the properties equity. Be careful about removing home equity for the wrong reasons. You have to keep in mind that you will be paying interest on this money you have accumulated. If you are planning to make improvements on the home or to do some needed repairs then you will be increasing the home equity. If you use the loan for any other reason you are simply losing the equity you built and will leave yourself no easy way to build new equity.
If you used the homes equity to pay student loans or to take a vacation then it is lost forever. You might find that upon selling the property that after closing you walk away empty handed. The point of owning a home is that it is an investment, so treat a second bond as an only if completely necessary option. If the home needs a roof or you would like to add a room then the 2nd bond would be increasing equity in the home and would be a good investment move.
You primary mortgage company is not your only choice. You can shop around for the best rates from many banks, credit unions, or even other mortgage companies. Just like your primary bond the 2nd bond will have terms and other features to the quote you need to have specified by the lender.
Most places have slightly higher interest rates for secondary bonds. You may also find that some companies will offer you 100% of your equity as available for lending while others normally allow 85% or less. Be very cautious of the 100% lenders as they will have much higher interest rates and you also are using all your equity that took years to build.
The lender will require an appraiser to come out to evaluate the property first hand. The lender then uses the information gathered from the appraiser to figure out what the actual homes value is and what is available for lending through its equity.
The appraiser will look at the homes over all quality as well as surrounding homes that are similar. You need to make sure that you have the home in the best possible shape you can in order to gain the highest appraisal. If the appraiser walks up to your home and finds a deck that is falling apart or gutters that are hanging you will lose hundreds of dollars of the homes equity amount.
Make sure you inform your lender as well as the appraiser of any improvements that are being made. You want them to be able to assess the property as is but also to look at the value of what it will be once improvements are complete.
About the Author:
Susan Reynolds is a content coordinator a leading South African bond origination portal. For more information visit: http://www.bondcredit.co.za/
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