 Good evening and welcome to the Private Property Podcast. I'm your host, Zaman Tumwa Khumalo. This is episode 18 of the Private Property Podcast and we're of course on day 41 of the National Lockdown. This evening's topic is quite an exciting one and I'm sure many of us are trying to find different ways that we can make money, especially if you've got a bond facility or more than one bond facility and that's exactly what we're going to be talking about. We'll be looking at the different ways that you can make money from your bond facility or you can access some of that money. And to help us better understand how we can do this, I'm joined in the line by Nundu Misso Kapai, who's the head of products at Apsa Home Loan. Nundu Misso, thank you so much for joining us this evening. Good evening. Good evening, thank you Zaman. Excited to be here and to be chatting about this topic. Thank you. I mean, a lot of us who've got home loan facilities want to find out how we can best maximize that facility, how we can make money from that facility or how we can even save money. I mean, oftentimes I hear a lot of people saying they would want to open as many home loan facilities as the bank would grant them because you're essentially able to maximize each facility as much as possible. But so many of us probably don't know what that even means or how to go about them. So I'd like us to first just start off with, have some of the key ways that people can actually make money from their respective bond facilities. Great, Zaman. So let's break it down and make it as simple as possible. So let's take a scenario. You are a home owner and you have a bond with the bank. There can be three ways in which you can access money from your home loan. The first one is called a Flexi Reserve and it goes through the detail as well. The second one is called a Re-Advance and then the third one is called a Further-Advance. So I'm going to start with the one that excites me and we're going to laugh about it because even as little as saving money from your coffee every day, it can make a huge difference. So simply a Flexi Reserve is when you pay extra over and above your normal monthly home loan installment, right? Now the benefit of doing that means that over time you can save on interest, okay? So as we know for a home loan, interest is calculated daily on the outstanding balance and it's capitalized monthly. Now I want to take a very simple example of Usama. Let's make an example where you might have a property and to the value of a million and you have bonded it over a 20 year period. Now you decide, hmm, I'm paying about at a rate, it's usually interest rate 7.75 and you are probably paying about 7,300 a month in terms of monthly installments. Now you decide actually, let me see if I can save at least a hundred bucks a month by putting it into my home loan. And I'm gonna play around with the calculator just to make it simple. So what it does, when I calculate that, it means over the term of that loan, the 20 years, you're actually saving over 30,000 grand in interest. But now let's take it further. Saving on interest is one thing, but you can actually then access the extra payments that you are making monthly to your home loan. And you can access it in easy ways from a banking point of view, it could be you simply transacting between your check account and your home loan account through this facility, either via the banking app or via internet banking. So it's as simple as that. If we think about a flexi reserve and just paying a little bit extra. Obviously the more you put in and as often as you can, the better that you are able to save more on interest and also the benefit of having to tap into the extra funds when a rainy day does come along. I do think the other important aspect is obviously with regards to interest rates, right? So when interest rates do go down, one would then think about, can I keep my monthly instalments the way they are? Because that extra bit becomes your additional funds that you would then be putting into your home loan, which you can access at any point in time. So that's something that's a flexi reserve, yeah. And with the flexi reserve, so we're saving on the interest. So if you had that one million rent bond essentially and you're putting in just an extra 100 grand, you're saving above 30,000 rats. With that option, are you able to, does that also have an impact on your loan term? Because when oftentimes when people pay extra, we say to you would have saved 30,000 rands on interest and you would have lessened the term from 20 years down to let's say 17 years or whatever the term would be affected. Does the flexi reserve option also reduce the loan term essentially as you're paying that extra money? Yeah, absolutely. So it does have an impact on term and the example that we use, and I'm gonna play around with let's say 900,000. And again, you put in 100 grand and at a rate of 7.75, you would save on seven months. So it brings back seven months. I mean, it's as simple as that. I mean, if we care around with different values for somebody who's looking at a 1.5 because I really wanna make it real to those that are listening and you put in let's say 500 grand a month, you are saving over 147,000 rands in interest. And then the term to your point, Summer, it means you're bringing back 20 months in terms of the benefit that you'll see by just paying a little bit extra on a monthly basis into your home loan. And I actually want to encourage our viewers at home to play around with that home loan calculator. I, it's one of my favorite tools to play around with. I mean, I think if anything, you sometimes even able to see if you put in a once-off amount, so let's say you're just putting in 2,000 rand once-off, how much would you have saved is able to tell you that kind of data. So sometimes maybe you don't want to commit to an extra habit of drag. And it might be because you don't have it. I mean, we're currently going through really difficult times financially. So you might not have that little bit extra, but you might have just that 2,000 rand. So if you put it in there, already you can see just by putting it in here, this is how much I would have essentially saved or I would have shaved off, whether it's a month or two months of my bond payment. And again, one of the things that you mentioned that so many of us, I hope are taking advantage of, especially since we've had the interest rate decrease. And so many of them this year is that every time the interest rate decreases, you keep the loan payment the same. So sometimes it literally means calling your bank and saying, hi, please keep it the same. I mean, my bond payment was 7,000 rand. I know we've just had a reduction. So maybe now it might be 6,800, but I actually wanted to stay the same because it would have already budgeted for that 7,000. I mean, it's been going off for a couple of months. So it's already in your normal monthly expenses. So you don't need access really to that additional 200 or whatever the funds are. So I do urge our viewers at home to actually make sure that as we keep getting the decreases and maybe there might be another one. I mean, a lot of us who have home loans would love to see another interest rate cut to just make sure that you call the bank and you just ask them to let it remain the same. And it does have quite a long, a big impact in the long run. So that's the first one. So that's the flex series reserve. You mentioned the re-advance. How does that happen? Okay. So a re-advance simply means that we're gonna use Yuzama again. Let's say you have a million rent property. Over time, you've paid it down to 800,000. And then you come back today and then you say, actually, you know what? Can I access the difference? So literally, I would like to take my home loan back to the original loan amount that was granted. And it's as simple as that. And I guess here, the difference is that we are gonna look at a credit assessment. We are gonna credit assist the application as it comes through to ensure that again from an NCA perspective, that you are able to afford. Now, the re-advance product does not require any registration at the D's office because it's simply taking what you have already by this time and taking it back to the original home loan amount that was granted when you got the bond initially. It's as simple as that. And often, I mean, I can imagine different people would have different reasons for doing this, but what have you found? Are some of the reasons why somebody would want to take the loan amount back? Is it maybe to finance another property or you just need that cash for whatever purposes that you might want to use it for? Yeah. So as a bank, obviously we wouldn't dictate what customers should do with their money, but typically, home owners would want to renovate and would want to access that cash to make changes to their homes or to renovate or do anything special to their homes. But also it's about being able to access the funds for anything. It could be a rainy day or it could be to purchase other assets and it could be for wealth creation purposes. So really it's up to the individual or the home owner as they decide based on their dreams and goals around what they would want to do with those funds. I think as a bank, we're here to enable to really make those dreams possible for home owners. And I like that idea that you have access to additional funds or funds that you would have already sort of paid up because you now have a bit of equity in your own property. On this readvance with that, essentially also includes, suppose you put down a significant deposit. So say, and that's one million rent property, Zama seems to have a lot of those in our scenarios that one million rent property, I put down 100,000 rent and now I've paid, let's say I've paid an additional 200 over the years. So I essentially have 300,000 rents that I can access. So am I also able to essentially access the deposit component that I paid at the beginning of the term? So it sounds like so we're talking a couple of things. So obviously as you pay your deposit when you've applied, remember there's a loan to value component. So it obviously reduces the amount that you're asking from the bank. I think let's probably separate those. But if you are saying you are paying more and more into your home loan, it takes us back to a situation where you've got those prepaid funds because they'll still be there, right? And it also means that you sit with the readvance benefit as well. So you can actually access both in a way as you pay more. So I just wanted us to separate the initial deposit because that brings down the amount that you're borrowing from the bank but also recognizing the fact that whatever you put in, extra over and above still becomes available and you still get that benefit from an interest point of view and a term. But also it means that what you're owing is less and you can still go back after that original amount that you would have borrowed initially. So I'm going to stay on this one just a little because I've heard people play around with their bonds in interesting ways that I think that's amazing. And it's always great to learn about the different ways that people play around with their bond. So in the event, again, where it's this one million rent property, of course, if I've got the 10% deposit, the odds would have been that the bond that's registered is 900,000 rents. So I'm simply asking, I still have that 100,000 and I want the, I mean, I still have that 100,000 and I want the bond to still be registered at one million rent, even though I'm going to deposit that 100,000 rents. So I know that the bond that's registered, so the Deed's office has it as that one million and I know that the facility in its entirety is still going to be a million, are still deposits that 100,000 after that million rent has been registered, just so from the bank's perspective, I also have a decent road to value, but essentially I want to make sure that, I want to now essentially establish, once I've paid the additional 200,000, let's say I'm able to get there after four years, can I, do I now have access to 300,000 rents or will I only have access to just the 200,000 and not that other 100,000? That was essentially the deposit component. So I love the question because it's taking us into a space where I know some would call it a future bond, where you register a higher bond amount. It's definitely, you can do it. And I guess the benefit, Summer, is that you would pay the cost of registering a higher bond at that point in time. And you can come back, Summer, you're right. You can come back and request for money up to that, above, above, up to that million, whatever that bond has been registered at the Deed's office and you can access that. Certainly, we call it a future bond within the EPSA home loan space and it can be done. Those that can do it, at the point of registering a bond, it is a good thing. And because then it means you won't have to pay those costs to take a bond higher up. Yeah. Before we go to the third one, Nundumi, so you mentioned when we started this conversation that that third one is the future advance. Actually, I want you to take a quick break. We were already getting lots of questions from our viewers at home. Remember, if you have any questions for Nundumi, so do send them through and we'll be sure to address them shortly. We'll be just back just after the short break. This evening, I'm joined by Nundumi Sokapai, who's the head of products at EPSA Home Loans and we're talking about how to use your home loan to access money. And I'm sure that so many of us probably want to be able to access money into our home loans, especially if you've been paying extra. The two different ways that you can access money that Nundumi so mentioned just before the break was the Flexi Reserve and then the second one. And the Flexi Reserve, of course, is when you pay in a little bit extra, whether it's a 100 grand a month or 500 grand a month or whatever little that you have, you essentially will be able to have access to those funds in the future. So every time you have a little bit of spare change, only it's just thrown into your home loan account. It never goes wasted. It really does go a long way. Not only do you save on interest, but you're also able to essentially cut down on your term period or the length of your loan. And then the second one is the re-advance. And of course that re-advance is, if you've already, let's say, paid 200 grand, I mean, 200,000 rands into a one million grand bond and you now want to have access or you want to bring your bond back to a million grand, then you're essentially able to do that. So you'll have access to that 200,000 rands. And of course, Apsa is going to make sure that they still do a credit check to make sure that you're essentially still able to afford that amount. And in the event that you do, then you'll have access to those funds. The third one that we're going to go through right now is further advance. No, no, Miss, if you can take us through what a further advance is and how that one works and how people can essentially make money from that option as well. Okay, great. So a further advance means that we're looking at, you can then apply to access the equity in your property by simply then accessing that difference. So let's take Zama's example where the property is now worth 1.5. It means now Zama is looking at increasing her original bond from one million to 1.5. And it means that at the Deeds office we'll be registering the higher bond amount. And that's when we talk about unlocking equity based on the market value of the property that would have gone up. And it doesn't tell Zama the credit assessment from the bank. It's fundamentally different from a flexi reserve, which is obviously where you pay extra. And here we would need to look at whether you would be able to afford the higher bond amount. I do know that before the break, we also spoke about the future bond component. So here we assume that obviously you hadn't registered the higher bond, but now you're simply asking, I do want a higher one, but obviously it is going to be based on the increased market value of your property. I was actually about to ask that if the market value is taken into consideration, but also then that means that there are also bond registration costs because you are now essentially registering a higher bond than what you previously had to register. Okay, and just a quick one, I don't know if our viewers at home would probably find this beneficial. Are there instances, because I've heard some people say that they're able to get their banks to do this, but have there been instances certainly from Axis perspective where those bond registration costs are able to be absolved within the loan facility itself? So if the bond registration, let's say it's going to cost 20,000 rands, instead of the person paying the attorney's direct, that amount be put, that cost essentially be affected into the loan amount. So let's say the loan instead of it being 100,000, I mean, one million rand, it ends up being a million and 20,000 rands. Is that something that Axis sometimes does with clients who are getting that bond facility? Yeah, so it really depends on the proposition that we would have put out in the market and we'll review our proposition from time to time. And we have always looked at what the bank can put in on behalf of the customer. So in some cases, based on campaigns here, I'm talking about proposition campaigns where we would go out and say to our existing customer that if you do want to access equity, we do have an offer where we as a bank will put in a certain amount towards the registration costs. And then as a customer, you would only have very little to put in. So again, it depends from time to time what propositions we run as a bank to assist customers and to fulfill the needs of our customer's dreams. And that really is quite a great way to unlock value and equity into your property because I can imagine, especially after last year when in Johannesburg, when you saw COJ doing the rates and evaluating the different properties and people saw some of the value of their properties going higher. And also people had quite a number of complaints because it obviously affects the actual rates that you pay the municipality. But I think for some, it probably then makes a good business case to then approach your bank to say, well, when I bought this property, it was valued at one million Rand. COJ has now come and they're estimating that it's now currently valued at 1.8 million Rand. And suppose you actually do qualify for that high up on the amount, you essentially would have unlocked that value. And maybe if you want, you can use those funds whatever purpose that you'd actually want to use it for. So we have been receiving quite a lot of questions and comments from our viewers at home. And remember, if you've got any questions, you're more than welcome to send it through and we'll be addressing them. The first one that I'm going to ask is from, from Unzalama, Monele, who asks, if you aren't working anymore, can you really access the funds? And this is, of course, in reference to, let's say the Flexi reserve where you've already paid in all those additional funds over the years, perhaps you are affected by the current retrenchments that are taking place and you're now no longer working, will a customer be able to essentially access those additional funds that they've paid over the years? That's a brilliant question because it opens up another conversation. But let's start with, I'm no longer working and I've had prepaid funds. So let's assume that you did not fall into our rears, right? Because there are cases where if you do fall into our rears and the prepaid funds will be used to pay the arrears and to bring you up to date. So let's assume you're not in our rears and you found yourself in a situation where you're no longer working, you can access those funds. But then again, Zama, I would then say, rather approach the bank, have a conversation around your situation because there are various solutions that we've got in case to assist customers that find themselves in that situation and we look at different, whether it's a short-term plan, long-term plans for bearing plans, those plans are there. Why I like the question, I like it because it leads us into a payment relief that was launched by Epsa Bank end of March, which looked at how to assist customers during the current context that we find ourselves in as a country. So, and I'm gonna bring it home to a home loan because we're talking bonds tonight. So simply that relief program says, you can defer payments up to three months, for three months, which means that you won't be paying. However, we will continue to charge interest and fees during that period and capitalize. And then at the end of the three-month payment relief, what we will do as a bank, we will then look at you individually and understand what loan term do we need to apply to enable you to pay almost the same amount that you were paying before the payment relief. And I'm glad because the question was raised because it's another way that we as a bank are looking at assisting customers to find themselves in a very difficult situation given where we are as a country. And another question coming in is coming in from Bong Sebagwe, and I've asked, so if you re-advanced, do you get a new term to pay back or do you have to pay the money back in the original term agreed when you first took the bond? So it depends. Remember, we will credit assess it and calculate what is required based on your individual profile. So I don't want to give a standard answer to that, but we will credit assess, and that's why it's important for both products. Re-advance, further advance. When you apply, we look at your own individual affordability and based on that, we're able then to determine what is required in terms of the monthly payments in the term. And then another one coming in is what are the implications of refinance on investment property when it comes to tax seeing that interest that you pay on the bond date is tax deductible? So that's an interesting one. And where it comes to tax, I would really say that is where you need to approach the bank and talk to a tax consultant to understand the implications, especially where you have several properties and what it means to you as an individual. Okay, so if you are, of course, tuned in, do you send in more of your questions? These are really good questions. We've got another one coming in from Sian and Nanga who asked, under re-advance, will the term go back to the original 20 years or remain where it is, including the monthly repayment? So let's take an example. If the term was to remain where it is, of course the implication would be that you would have to pay slightly higher. So, and I think that's an important principle to learn is that the shorter the term, the more you're asking for, the slightly higher it is and obviously considering interest. So, and I'll go back to say, when you do apply, we will look at your own individual application and understand what the new installment will be and the new term. Okay, another question coming in, these are really great questions. I can see a lot of us are into property. We've got different bond facilities and we're really trying to find the different ways that we can unlock some cash in those respective facilities, whether we've been paying extra or whether perhaps you want to have an equity stake or a bigger equity stake in our respective properties. Another one, and this is for somebody who wants a foot into the property letter, is coming in from Zwa Tabeete who asks, how can he apply for a home loan? So where would be the starting point if you wanted to apply for an absolute home loan? So, obviously, if I think about where we are today, the current context, you can apply online on our website, app.co.za. You can also reach us and contact us through our call center line, which is the 0860-21007 line, or you can approach the branch to then engage and apply for a home loan. On the website, we've got all the relevant information. And I guess one of the big ones, Zama, if I can, is talk about the home loan estimator tool that we've got, which will help the aspiring home owner to calculate and get a view of what they're likely to get from a bank if they were to apply. When you go through that home loan estimator process, we will look at your credit profile at that point in time. We will ask you for your income and your experiences to understand your affordability, and we will score it and give you an offer. And you can then use that to go shopping for a home within your affordability. And I think it's a great tool because you don't have to submit an application. Simply go in, in under 10 minutes, you can get a view of what the bank is likely to give you should you apply for a home loan from us. And it really is such a great tool. I think more than anything, it also not only does it help you in terms of how much a bank is willing to potentially give you in a home loan, but it also helps scale down your search. So instead of viewing a two million rent house, you know that perhaps you only qualify for max 1.5. Maybe you should be looking at a property that's around 1.2 to 1.4. So it even helps you in your home search and make sure that you're not too off the mark as you start putting together those pictures on your vision board around the property that you want. So before I let you go, any other tips for our viewers at home around how they can best maximize home loan facilities that they have? Thank you. So let's go back to the Flix Reserve. I would say start with a goal. And if your goal is towards a particular investment at some point in time, or it's a holiday or you wanna renovate your home, start with a goal. And it's about understanding your own budget and trimming on unnecessary luxuries if you have the goal. And saying every little bit counts. Anything that you put in ultimately will become a benefit to you from an interest point of view from a savings and then secondly from a term perspective. And then thirdly, it's about the ability to access those extra funds should you need to even for a rainy day. And I guess the last one around Flix Reserve is that if you have a transactional account with the bank, it makes it so much easier to transact between your home loan and your check account. You can easily put in more using the banking app or the internet banking or you can draw out as and when you require. So that would be the tips. And then around the re-advanced and the further advanced again, it's about understanding your own affordability at that point in time. The two options do mean that we will look at a credit assessment to understand whether your affordability is sufficient for us to grant you that additional credit. And again, from time to time as a bank we will look at different propositions we do launch campaigns where in some cases you are able to pay a certain portion of the registration costs when it comes to a further advance. And then the last one Zama, if I can is also around when you do apply for a bond the first time as a homeowner or property investor. If you are able to register a higher bond amount you can and that can be done. And then further down the line should you need to access those extra funds then you will find that you will not have to incur the costs associated with registering a higher bond amount. And to sum it off, I mean as a bank we're here to enable dreams and really going back to the question around, I'm no longer working what should I do? There is a payment relief program that we have launched as a bank and it's there to help you as a homeowner for the period in which you might find yourself being under a lot of strain financially. Approach us, we're there to help all the information is on our website. And of course if you want to find out more information on that you can go to www.apsa.co.za and they're more than happy to help. Nundumisa, thank you so much for joining us this evening. That's Nundumisa Tapai who's the head of products at Apsa Home Loans. And we've of course been looking at the different ways that you can access money using your home loan facility. We're back again tomorrow evening. I hope that you'll be staying home and staying safe and of course if you want to catch up on some of our older episodes if you've missed any, you can always go back right here on Facebook or go onto YouTube to look at the past episodes. Until tomorrow evening, stay home and stay safe. Thank you Nundumisa.