Access Bond Facility – This allows you to deposit and draw funds from your home loan up to a set amount.

Agreement of Sale / Offer to Purchase – Contract is signed by a buyer and seller stating the terms and conditions under which the property will be sold

Annual Premium – This is the premium payable once a year in respect of a life assurance or a home owner’s insurance policy.

Attorney – When buying property two different attorneys are involved; Transferring and Registration Attorney. The Seller gets to nominate the Transferring attorney whereas the purchaser gets to nominate the Registration / Bond Attorney

Assessment – The bank’s assessed value of the property

Assessment Fee – This fee pays for the administration work that accompanies a property assessment.

BA Linked Rate – Rate linked to 3 month BA SAFEX rate which can be monitored on an ongoing basis. This option guarantees a fixed rate for three months. The rate will change every three months in line with the cost of short term funding rates. This type of product normally has a minimum loan size and a maximum loan to value qualification criteria.

Balance Sheet – Used for the recording of the financial positions of private individuals, companies, cc’s and trusts.

Bearer / Seller – The legal owner of a piece of property.

Bona Fide – In good faith.

Bond Costs – These are the conveyance’s fees, stamp duty and VAT. They are payable by the buyer to the attorney attending to the registration of the bond on behalf of the bank. Conveyancing fees and stamp duty are calculated on a sliding scale based on the bond registered.

Bond registration fee – The fee charged for the registration of the home loan in the buyer’s name

Bond Term – This is the original term of the loan

Borrower (Mortgagor) – An individual who applies for and receives funds in the form of a loan and is obligated to repay the loan in full under the terms of the loan.

Broker / Estate Agent – An individual who brings buyers and sellers together and assists in negotiating contracts for a client.

Building Contract – A Contract between the land buyer and the builder, outlining the specifications of the building.

Building Loan – A Loan granted to a buyer who buys a vacant plot of land on which he intends to build

Buyer’s Market – Market conditions that favour buyers. With more sellers than buyers in the market, sellers may be forced to make substantial price concessions.

Capped Rate – Consumer safeguards which limit the amount the interest rate on an adjustable rate mortgage can change in an adjustment interval and/or over the life of the loan.

Ceiling – The maximum allowable interest rate of a variable rate mortgage

Collateral – Assets (such as your home) pledged as security for a home loan by either yourself or a relative

Contract of Sale – The agreement between the buyer and seller on the purchase price, terms, and conditions of a sale.

Conveyance – The document used to effect a transfer, such as a deed, or mortgage.

Cooling off period – This clause is included in an offer to purchase a property under R250 000. It is based on a new law allowing first time home buyers the opportunity to change their minds within five days of signing the offer.

Credit Bureau – A credit bureau is a clearinghouse for credit history information.

Credit Report / Profile – A report detailing the credit history of a prospective borrower that’s used to help determine borrower creditworthiness. There are 2 main Credit companies used by lenders in South Africa, namely ITC and Experian. These companies collate credit history on individuals and companies, which they obtain from various sources in the retail market place and legal system. Your bank account history is another important source of credit information used by lenders in assessing your credit profile.

Credit Score – A statistical method of assessing your creditworthiness. Your credit card history; amount of outstanding debt; the type of credit you use; negative information such as bankruptcies or late payments; collection accounts and judgments; too little credit history and too many credit lines with the maximum amount borrowed are all included in credit-scoring models to determine your credit score.

Deed – Legal document by which title to real property is transferred from one owner to another. The deed contains a description of the property, and is signed, witnessed, and delivered to the buyer at closing.
Deeds Office – This is a government department whose task it is to attend to the registration of transfers of Immovable property

Deeds Office Registration Fees – These fees are charged by the Deeds Office for registering the mortgage bond and the title deed

Default – Failure to meet legal obligations in a contract, including failure to make payments on a loan.

Deposit / collateral – The deposit is the part of the purchase price of the property that you pay in cash up front and reduces the amount that you will need to lend. A lender prefers a deposit as it means that the borrower has a financial commitment, in the property and the home loan required is less than the current market value of the property. For this reason the loan to value concept is an important factor in negotiating rate concessions and obtaining loan approval with minimum supporting documentation. Collateral other than property is also taken into account when calculating your loan to value ratio.When a borrower does not have cash available for a deposit, other acceptable types of collateral security include, but are not limited to the following :Shares, fixed deposit, bank/company/government gurantees, debt free immovable property, life assurance policies.

Equity – This is the amount by which the value if a bonded property exceeds the amount owing on the loan
Finance Charge – This is the interest charged by the bank on the loan

Foreclosure (or Repossession) – Legal process by which a mortgaged property may be sold to pay off a mortgage loan that is in default.

Freehold – When you own the property and the land that it’s build on, and within building regulations you are able to renovate and or extend to the outside of your property.

Grace Period – Period of time during which a loan payment may be made after its due date without incurring a late penalty. The grace period is specified as part of the terms of the loan in the Note.

Gross Income – Total income before taxes or expenses are deducted.

Home loan Application – An initial statement of personal and financial information required to apply for a loan

Installment amount – This is the basic monthly installment amount payable on the home loan, excluding insurance or assurance premium, where applicable \

Interest – Charge paid for borrowing money, calculated as a percentage of the remaining balance of the amount borrowed

Interest Rate – The annual rate of interest on the loan, expressed as a percentage of 100.

Joint Liability – Liability shared among two or more people, each of whom is liable for the full debt.

Latent Defect – This is a fault or flaw that is not immediately detectable or is hidden from view on inspection of the property

Lender – The bank, mortgage company, or mortgage broker offering the loan.

Loan + Costs – This product allows the borrower to lend more than 100% of the property value. It is geared for the first time homeowner and allows the borrower to include registration and transfer costs with the purchase price of the home

Loan-to-Value Ratio (LTV) – This is the percentage the bank is willing to lend you, expressed as a percentage of the bank’s estimated value of the property and the loan amount requiredLoan to Value (LTV) = [home loan amount required divided by assessed property value] x 100 Home loans of up to and exceeding a LTV of 100% may in certain circumstances be granted, subject to an acceptable Affordability Factor and valuation of the property in question.

Monthly instalments – Over the term of your loan, you will repay your home loan by way of regular monthly payments of principal and interest. Monthly installments are normally paid to the lender via debit order from your account. During the first few years, most of your payments will be applied towards interest. During the final years of your loan, your payment amounts will be applied primarily to the remaining principal debt. The amount of your monthlyinstalment can be affected by changes in interest rate and changes to the principal amount of your loan. As a rule of thumb your monthly installment should not exceed 30% of your gross monthly income.

Mortgage Broker – An individual or company that arranges financing for borrowers.

Mortgage or Bond – An agreement between you and the bank, stating that the bank will lend you a certain amount of money in the form of a home loan, and that you will pay the bank back over a certain period, on a monthly basis, and at a certain interest rate.

Notice of Default – Written notice to a borrower that a default has occurred and that legal action may be taken.

Occupation – This is the date the buyer moves into the property

Occupational Rental – This is paid by the buyer to the seller at an agreed amount, if the buyer decides to move into the property before transfer of ownership takes place.

Offer to Purchase – This is an offer in writing from the buyer to the seller, which is usually prepared by the estate agent. Once signed, by all parties it becomes a legal and binding contract between the buyer and the seller

Power of Attorney – Legal document authorizing one person to act on behalf of another.

Pre-approval – A lender’s firm commitment on a loan and it enables you to enter into negotiations with confidence. A pre-approval includes a preliminary screening of a borrower’s credit history. Information submitted during pre-approval is subject to verification at application.

Pre-qualification – Pre-qualifying gives you a general idea of your borrowing power. It is the process of determining how much money you will be eligible to borrow

Purchase Agreement / Deed of Sale – Contract signed by buyer and seller stating the terms and conditions under which a property will be sold.

Reducing / Step Down Rate – Regardless of whether the variable home loan interest rate falls or rises, the reducing interest rate option will apply for the agreed period (usually less than 5 years). This facility guarantees you that your interest rate will decrease by a set percentage every three to six months for the agreed period. Should this option be terminated before the expiry date an additional finance charge can be levied by the lender.

Registration – This is the process whereby ownership of the property is transferred form the seller to the buyer via a deed of transfer. Your home loan will be secured at the Deeds office as a mortgage bond.

Repayment Terms – The length of your home loan repayment period with the financial institution. The longer your repayment period the lower your instalments. The maximum repayment period is 20 years and is dependant on the home loan amount.

Second Mortgage – An additional mortgage placed on a property that has rights that are inferior to the first mortgage.

Sectional Title – An entire complex block of flats etc. divided into individual units, sold separately and no one of the owners has the right to extend to the property.

Stamp Duty – This is a tax obligatory by the government

Short Fall – Short fall is more likely when it comes to a building loan. This is when value in the property is higher than the bond granted from the bank. In other words the client has paid a big amount in cash and did not use the banks money.

For more info on Home Loans, Bonds and Mortgages please call us on (011)327-4489

www.mortgagepluscc.co.za

Bond Registration Costs and Transfer Costs.

We all know that there are costs when registering a bond or a home loan in South Africa. The problem is when you’re a first time buyer or even a second time buyer those hidden bond registration costs are often the ones that can nab you in the “ahem”, unless of course you get proper legal advice. There are loads of sites on the web that do give a very good breakdown of these costs, but we thought we’d join the masses and give some of our own advice too. Who knows, maybe we spot something they didn’t. The bond registration costs are: Bond/Registration Costs and Transfers Costs.
The entire process of property transfer involves a number of people, beginning with the seller who will sell his/her home either privately or with the assistance of an Estate Agent. If the property is sold by an estate agent the seller will pay commission to the agent. The amount payable is negotiable but the normal tariff, recommended by the Institute of Estate Agents is 7.5% – this commission will attract VAT as the agent is providing a service to the seller (14%). The buyer is responsible for the payment of transfer costs and the costs of registering any new mortgage bonds for the property purchased. He/she will also have to pay an inspection fee and initiation fee. Transfer costs include transfer duty and conveyancing fees. Transfer duty is calculated as a percentage of the purchase price and varies depending on the purchaser’s legal status. Bond and transfer costs are always overlooked when buying a property, especially your first one, and should be thoroughly understood . These costs more often than not catch people out and amount to thousand’s of rand’s. Understand them and read this document carefully as they DO affect the total value of the property you are purchasing.

Bond Costs (Also known as Registration costs)

Your total bond registration costs on a bond of R540,000.00 is R6986.00. Note: this is excluding your transfer costs.

1. Conveyancing Fees

You have to pay the conveyances (attorneys) who register the property in your name, as well as the conveyances appointed by the bank to register a mortgage bond over your property. These are known as CONVEYANCING FEES. The Law Society has recommended tariffs that conveyances may charge to transfer property into your name and register your bond. Once again the higher the purchase price of the property, the higher the conveyancing fees. Example conveyancing prices excluding VAT@14% R 540,000.00 property cost – R 4,600.00 fee R1,500,000.00 property cost – R 14,000.00 fee

2. Revenue Stamp Fees

Otherwise known as stamp duty. Stamp duty is state government tax that is payable when a property is sold by the buyer of the property. If you’re looking for a definition see the following link: Stamp Duty Definition. For a property valued at R540,000.00 your stamp duty will be R1,000.00.

3. Posts and Petties

Post and petties include all costs to the bank for postage’s, admin fees, phones calls and odds and ends (Please you thought you were going to get something free, look again). For a property values at R540,000.00 your post and petties charges will be R300.00

4. VAT

Thanks SARS without you where would we be VAT charges are R686.00 on a bond of R540,000.00

5. Deeds Office Registration Fees

The deeds office do everything that’s required to register the bond into the buyers name. They fall under the Department of Land Affairs so unfortunately they fall under the dreaded “Government Department Sector”. This is the final step in the entire process and normally takes up to 15 days. A fixed fee payable to the Deeds Office for registering the bond. Deeds office charges are R400.00 for a bond of R540,000.00

Transfer Costs

Your total transfer costs on a bond of R540,000.00 will be R15,108.00. Note: this excludes your registration costs.

1. Transfer Duties

The South African Government levies a tax on property transactions called transfer duty. This is paid when you buy a property and it is transferred into your name. When you purchase an existing home the transfer duty is based on the value of the land and the building. This is why purchasing vacant land can be such an advantage as you only pay transfer duties on the value of the land. Transfer duty is charged depending on the price of the property purchased, the more expensive it is, the higher the transfer duty.

• The transfer duty on a bond under R500 000.00 is zero
• Bonds from R 500 001.00 to 1 million = R 25 000.00 Transfer Duty
• Above R 1 000 001.00 = R 25 000.00 + 8% Transfer Duty

Purchasing a property in the name of a CC, company or a trust, you will be charged a transfer duty of 10% of the purchase price. Should a property be bought from a property developer, you will pay VAT portion rather than the transfer duty on the purchase price. Should you want to work out your costs check out our Mortgage Calculators.

2. Conveyancing Fees

Conveyancing fees. Example prices excluding VAT@14% R 540 000.00 property cost – R 6,800.00 fee R1,500,000.00 property cost – R 12,000.00 fee

3. Posts and Sundries

The cost of documents and certificates that the conveyancing attorney needs for registration submission. R400.00 on a bond of R540,000.00

4. VAT

As Above. R1,008.00 on a bond of R540,000.00

5. Deeds Office Fees

Deeds office fees are As Above. R400.00 on a bond of R540,000.00

6. Incidental Fees

This also falls under the postage / courier service fee charges. I don’t think that this is a definite charge but may be charge should you be residing overseas.
The fee is R1,500.00 on a bond of R540,000.00

Costs and Attorneys (SUMMARY)

When purchasing a property some costs are involved.

Deposit

Needed if one qualifies for a percentage of the loan. Interest can be earned on the deposit if kept by an attorney in a trust until the property is transferred into your name. It is equity that you introduce. Historically it was a prerequisite, but these days it is more flexible. mount is stated in the Offer to Purchase contract.

Conveyancing Fees / Transfer fees consists of:

Includes “transfer duty” payable to the receiver of revenue, as well as “deeds office fee” and “administrative fee” payable to the transferring attorney pro rate to the local authorities or Body Corporate – if sectional title. Be aware that transfer duty is not to be paid if the transaction involves a VAT registered party. The deeds and admin fee is payable on a VAT transaction.

Transfer Duty

- Paid to the receiver of revenue, a form of tax levied when transfer of land ownership is registered.

Administration Fee

- Monthly fee charged on loans on residential property – payable to the transferring attorney.

Deeds office transfer fee

- Fixed fee payable to Deeds Office or transferring the fee

Postage and sundries

- The cost of documents and certificates that the conveyancing attorney needs for transfer submission

Bond Registration Fees consists of:

Includes a registration fee/bond costs. Calculated on total loan amount registered or further advance amount.

Deeds Office Registration Fee

- Fixed fee payable to Deeds Office for registering fee

Postage and Sundries

- The cost of documents and certificates that the conveyancing attorney needs for registration submission.

Valuation Assessment Fee

- Bank assessors carry out valuation and a fee is charged. New Credit Act will possibly influence the existence of this fee. Payable to the bank. Also know as security assessment fee. 

To apply for your mortgage please go to www.mortgagepluscc.co.za

or call us on 011.327.4489