Quick answer: If you own a home with equity, you can use a loan against it to pay off several debts and replace them with one repayment, often at a lower interest rate than credit cards or store accounts. The trade-off is that your property becomes the security, so missed repayments can put your home at risk.
Work out your equity, compare the total cost (not just the rate), and only consolidate debts you are committed to not rebuilding. New Heights Finance is a broker, not a lender, so we introduce you to specialist lenders and approval is decided by the lender.
How does debt consolidation against a house work?
A lender advances funds secured against your property. You use those funds to settle credit cards, store accounts, personal loans or overdrafts, and you are left with one loan and one monthly repayment. Because the loan is secured, the rate is often lower than unsecured borrowing. For a property-specific overview, see our page on debt consolidation on bonded property and our guide to consolidating debt using your property.
Risks and benefits at a glance
| Benefits | Risks |
|---|---|
| One repayment instead of many | Your home is the security, so default can lead to losing it |
| Rate is often lower than credit cards and store accounts | A longer term can mean more total interest even at a lower rate |
| Fixed term gives a clear debt-free date | Fees, valuation and legal costs can add to the cost |
| Fewer missed payments can protect your credit record | Re-using cleared credit cards puts you in a worse position |
Step 1: Work out how much equity you have
Equity is your property’s current market value minus what you still owe on your bond. Get a realistic valuation and check your latest bond statement. Lenders normally advance only a percentage of the property’s value, set by each lender, and that limit includes any existing bond.
| Illustrative example | Amount |
|---|---|
| Property market value | R2,000,000 |
| Outstanding bond | R900,000 |
| Equity | R1,100,000 |
| Debts you want to consolidate | R350,000 |
Numbers are for illustration only. Actual amounts depend on the lender’s valuation and criteria.
Step 2: Add up what you owe and what it costs
List every debt, its balance, interest rate and monthly instalment. Compare the total you currently pay per month and over time with the quoted repayment on the new loan. Use our loan repayment calculator and loan affordability calculator to test the numbers.
Step 3: Compare terms, not just the rate
- Interest rate and whether it is fixed or variable.
- Initiation, valuation and legal fees.
- Repayment term and the total amount repayable.
- Early settlement conditions.
A broker can compare specialist lenders for you and negotiate on your behalf, which is where loans against property arranged through New Heights Finance can help.
Step 4: Use the money only to clear the debts
Pay the targeted creditors directly and get written confirmation that each account is settled. Prioritise the most expensive debts first, such as credit cards, store accounts and short-term loans.
Step 5: Stay out of debt afterwards
- Build a budget around the single repayment.
- Start a small emergency fund so unexpected costs do not go back on a card.
- Avoid opening new credit accounts while you repay.
Is it the right option for you?
| Situation | Consider |
|---|---|
| Own a home with equity, stable income, high-interest debt | Property-backed consolidation |
| No property, moderate debt, good credit record | An unsecured personal loan or a lender’s consolidation product |
| Cannot meet current repayments at all | Speak to a registered debt counsellor about debt review before taking new credit |
This article is general information, not financial or legal advice. Speak to a qualified adviser before securing debt against your home.
FAQs
Can I get a loan against my house if I still have a bond?
Often yes, if there is enough equity after your existing bond. The lender decides how much it will advance against the property’s value.
Will consolidating debt hurt my credit score?
There may be a short-term impact from the application, but paying one instalment on time and clearing overdue accounts can help your record over time.
What if I cannot repay the loan?
Because the loan is secured against your property, the lender may take steps to recover it. If you expect difficulty, speak to the lender early and consider professional debt counselling.
Does New Heights Finance lend the money?
No. We are a finance broker that introduces you to specialist lenders. Approval is decided by the lender and is never guaranteed.
Want to see what your property could support?
Explore debt consolidation on bonded property or speak to our team about a loan against your property.