What is a further loan?

A further loan (also called a further advance) refers to borrowing an additional amount on your existing home loan. The requirement to register the new amount, or not, will depend on whether a higher amount was registered than the loan amount when you initially took out your bond.

If your bond amount registered was the same as your loan amount and you have not yet paid off enough for the additional amount required, then the additional amount that you require would have to be registered. You would need to qualify for the additional loan amount, and there must be sufficient value in your property. There would also be registration costs to be paid for the additional amount.

If you initially registered an amount higher than the loan amount taken, you can take the difference as a further loan without having to register the further amount. Here too, however, you would need to qualify for the loan amount and there would have to be sufficient value in the property.

Further loan vs Readvance

A further loan or further advance is different from a readvance, although both are linked to your existing bond. A readvance is the difference between the outstanding balance on your home loan and the original loan amount granted - called the scope. This would not be the registered amount, as the registered amount could have been higher than the loan amount.

It helps to know the difference between the two so that you can choose the one that's right for you and works best with your budget.

Further loan / Further advance	Readvance
An additional amount borrowed over and above the initial loan amount	The difference between your original loan amount taken and your outstanding balance
An additional amount to what you originally borrowed when taking out your bond.	Access the capital already paid off on your bond.
Needs to be registered, but is a quicker than taking out a new bond as there is no transfer involved.	Does not require the registration of a new bond.
Slower turnaround time than a readvance.	Quicker turnaround time than a further loan / further advance.
Involves bond registration costs, legal fees and valuation.	No bond registration costs and legal fees.
Typically, you can apply for it through a bond originator like BetterBond.	You must apply directly with the bank that granted your home loan.
The new loan could affect the interest rate on your existing home loan.
You must have a good credit record to qualify, and your affordability will also be checked.
Both loans can be used for anything of your choice.
The money can be paid into your bank account or your home loan account. It could be placed in an access facility to use as and when you require it. That way you only pay interest on the amount you use.
Terms and conditions apply.