your guide to remortgaging

What is Remortgaging

Remortgaging is the process of taking your mortgage back out to the 'market' to get banks (including your existing bank) to re-compete for your business. This may be to get a better rate of interest, more money, or a new product. Your existing mortgage will have been offered to you based on your financial situation when you applied for your new mortgage to buy your property. If that was 5 years, or even 2 years ago your situation is probably completely different now. For example your salary may have increased, your house price has probably doubled, and your business may have thrived. All of which means that you are a better risk to the lender, and hence deserve a better rate. There has also been a considerable increase in mortgage products available in the market. This may mean that you require a different mortgage from the one you currently have. You may require a greater degree of flexibility, or choose to put yourself on a fixed mortgage as you are concerned about increases in interest rates affecting you.

What ever your requirements you can discuss this with your BondBusters remortgaging consultant so that they can source the most appropriate solution for you. Bond Busters introduced the concept of remortgaging to South Africa and are the market leaders in the industry. Since the introduction of the National Credit Act it is essential you seek qualified mortgage advice from a broker due to the complexities of the Act and your affordability calculations. Why Remortgage

The potential saving from remortgaging your Bond is enormous. If your income profile has changed in the last couple of years, you could qualify for a better deal or product and possibly a lower interest rate. Bond Busters can canvas the lending market for you and get you a better deal, thereby saving you thousands in the long run.

Why should I remortgage?

1. To consolidate other debts

You mortgage is your cheapest form of finance. This is due to it being "secured" against an asset - your property. Therefore in terms of saving on interest repayments you should consider borrowing with your mortgage rather than for vehicle finance, credit cards, overdrafts, short term loans etc. It is highly likely that all of these will have a higher interest rate that you have on your mortgage, so you should look to move the debt across.

As stated in "how much can I borrow" you can only consolidate these debts into your mortgage if there is enough 'equity' in the property to do so.

Note: Remember, by remortgaging to pay off other debts to save on the interest you are paying, you will be moving short term debt into long term debt. For example, you may be paying 14% on your vehicle finance, and only 11.5% when you move it into your bond - however your vehicle finance is only for 5 years but your mortgage is for 20 years. Therefore the most prudent way to manage this is to continue paying into your mortgage the combined amount that you were paying before. That way you will be reducing you mortgage far quicker than the 20 years outstanding.

2. To do home improvements


If you are looking to do improvements to your property, such as extensions, swimming pools, garages amongst others then you should look to remortgage your property to do so. Once you have the plans and quotes drawn up the lender will even lend you the funds based on the estimated value of the property after the improvements have been made.

3. To move to a more suitable mortgage product

The mortgage you took out several years ago may no longer be the best product for you. Mortgages are approved based on your current financial position which may be completely different to what it was when you took the original mortgage out. You may want to fix your mortgage for 2, 5 or even 20 years, move to an interest only mortgage, a one account, or to a product which has a more user friendly access facility.

4. To get a better interest rates

As above, the mortgage and the interest rate you were given when you took out your mortgage was based on your financial situation then. Your situation may have improved dramatically in which case you may deserve a better interest rate? Your mortgage consultant will be able to estimate the interest rate you should be paying and perform all the calculations to see how much it will cost you to move and how much money you will save overall.

A 1% decrease on your mortgage interest rate will save over half the current value of your bond in compound interest savings. So on a R500,000 mortgage that is R250,000 over the 20 years.


If you want to increase your mortgage for any reason you should use a good mortgage broker to do it for you. They will not only canvass your own bank for the additional amount, but canvass the rest of the market to see if you can get a better deal elsewhere. Your Bond Busters consultant will then provide all the options and costs to you of staying with your existing lender or moving to another lender.

Note: Remortgaging is extremely popular in other parts of the world. There is no such thing as a job for life anymore, why should there be a mortgage for life! It is essential that you do a financial health check every couple of years and not only review your mortgage but also your short term insurance, life assurance, retirement plans etc. You will be amazed at how much money you can save.