Yes, it is possible. The process of borrowing against your existing home to buy another house is commonly referred to as refinancing your existing property, or applying for a home loan on your bond-free property. Borrowing against your existing home is only possible if there is enough equity in the property.

How can I borrow against my house to buy another house?

Equity is the difference between what you owe on your bond and what your house is worth. For example, if you owe R1 million on your bond, but your house is worth R2 million, you have R1 million in equity. You can use this equity to buy another house or for any other purpose. Provided that you are able to qualify for the loan.

By refinancing your existing property, you are essentially applying to a new larger mortgage on your property and replacing the previous bond on that property.

What are the benefits of borrowing against my house?

There are several benefits and advantages of borrowing against your house to buy another house, such as:

 

• • You can use the equity in your property to buy a second home, either for investment, rental income, or personal use. This can increase your wealth and diversify your portfolio.

 

• • You can take advantage of lower interest rates and better deals on your new bond, especially if you use a bond originator to compare offers from different banks and lenders.

 

• • You can consolidate your debt by using the equity in your property to pay off other high-interest debts, such as credit cards, personal loans, or car loans. This can reduce your monthly repayments and save you money on interest.

 

• • You can improve your cash flow by using the equity in your property to pay for large expenses, such as home renovations, education fees, medical bills, or emergencies. This can help you avoid taking out more debt or dipping into your savings.

What are the disadvantages and risks of borrowing against my house?

There are also some disadvantages and risks of borrowing against your house to buy another house, such as:

 

• • You are increasing your debt and reducing your equity by taking out a new bond on your existing property. This means that you will have to pay more interest and fees over a longer period of time.

 

• • You are exposing yourself to market fluctuations and interest rate changes by taking out a new bond on your existing property. This means that if the value of your property drops, or if the interest rates increase, you could end up owing more than your property is worth, or paying more than you can afford. This could negatively affect your credit score and your ability to borrow in the future.

Is borrowing against my house to buy another house right for me?

Borrowing against your house can be a smart and profitable move, but it is not for everyone. It depends on your personal and financial situation, your goals and preferences, and your risk appetite and tolerance. Before you decide to borrow against your house to buy another house, you should:

 

• • Assess your current and future income and expenses, and make a realistic budget and cash flow projection. You should be able to comfortably afford the repayments.

 

• • Compare the costs and benefits of borrowing against your house, and weigh them against your alternatives. You should consider the interest rates, fees, taxes, and charges involved, as well as the potential appreciation, depreciation, and income of both properties.

Consult a professional bond originator to help you find the best home loan deal for your needs. A bond originator can save you time, money, and hassle by doing the research, comparison, and negotiation for you. They can also guide you through the application process and answer any questions you may have along the way.