Using an estate agent

How can an estate agent assist me?

Your search for a new home can be made much easier if you use the services of an estate agent. Agents make it their business to provide every service connected with your search for a home – from expert advice in the early stages, to careful monitoring of taking transfer of your home. The more closely you work with one agent, the better your needs become known and the more effectively they can help you, saving you time and possible trouble. All agents are bound by law to deal fairly and ethically with both the buyer and the seller. Because the seller typically mandates the agent, the agent is legally obliged to represent the seller’s interests. This means you must decide what offer to make and what counter-offers to accept. Don’t make or accept an offer that you are not completely comfortable with.

What are the benefits of using an estate agent?

The agent can help you to set up a plan of action through an analysis of your needs and finances, the current housing market and homes available in your price range. The agent personally conducts your search to find neighbourhoods and homes that fit your requirements. The agent can guide you through making an offer on a home and presenting it to the seller.

What is the role of the estate agent?

The estate agent is the link between the buyer and the seller. The agent will negotiate an agreement of sale acceptable to both parties. An offer to purchase is drafted by the estate agent. This must be signed by the agent, the buyer and the seller. Once signed it becomes a legal binding contract of sale. A copy of this document must be attached to the loan application form. For this service, the estate agent charges a fee or commission paid by the seller.

Ten questions for your attorney

1. To whom do I pay the Deposit?

This will depend on what your contract says. Your deposit can be paid either to the estate agency or the conveyancers appointed to handle the transfer. They both have trust accounts where your money is protected. Please ensure you receive the appropriate receipts. Don’t pay your deposit directly to the seller or to an estate agent, as opposed to the estate agency company.

2. Who gets the interest on the Deposit?

Unless otherwise agreed, the interest is paid to you after registration of transfer. On your written authority, both your estate agent and conveyancer can arrange for it to be invested in an interest-bearing account, and will act in your interests by placing it in the best short-term investment available.

3. To whom do I pay the Occupational Rental?

Your occupational rent goes to the estate agent or the conveyancer. They will usually pay it into the seller’s bond account or directly to the seller, if he has paid off enough of his bond account. You could pay it directly into the seller’s bond account if so agreed, but you may be required to provide proof of payment each month.

4. When will I have to sign the Transfer Documents?

This may only be a few weeks after the sale agreement is signed. Usually your conveyancer will wait until the bond is granted and he has received the cancellation figures for the seller’s existing bond. Only then can the guarantee authority forms be completed and signed. You can phone the conveyancer for an update at any time

5. How long will the transfer take to register?

This depends on the circumstances and due dates for the bond grant, and on the guarantees stipulated in the deed of sale. The average for most sales is about three months from the date of sale. When there are no complications, registration can be effected within two months. In cases where there are complications, registration can be delayed. In such cases, you will need to stay in touch with your conveyancer.

6. What will my transfer and bond costs be?

Your estate agent and attorney should be able to answer this question based on a schedule of transfer and bond costs. The actual transfer fees depend on the purchase price of the property. Bond costs depend on the total loan registered – and whether you are buying in your own name or in a trust, close corporation or company. Our fee calculator will give you a clear indication of the costs involved.

7. When must my transfer costs be paid?

This usually happens a few weeks after the sale, when you sign your documents. Your conveyancer will require payment, since he has to pay the transfer duty – the major charge on most transfers – in advance, as well as the rates or levies due to obtain a clearance certificate. Don’t delay making a payment – it will unnecessarily delay the transfer.

8. Who will register the transfer bonds?

The bank will have a local panel of conveyancers for bonds, and one of these will be instructed to register your bond. If the transfer conveyancer is one of those on the panel, he will probably do the bond registration as well. The bond costs will be the same, though your transfer may go through faster if the same conveyancer does both.

9. Who will contact me on registration?

Your conveyancer’s secretary should contact you on registration to advise you. You will also be given a final statement of the account. Your estate agent may also phone you to confirm registration. The bank will send you a letter advising you of the registration of your bond, and the date when your first instalment is payable.

10. Where will I get the keys to the property?

It is best to make an arrangement with your estate agent to pick up the keys from them on the agreed day of occupation.

Interest on your home loan

The interest rate the bank charges is determined by a number of factors.  The interest rate will reflect the risk the bank perceives with the transaction.  The amount of the loan, your personal financial record, your income and repayment, and perhaps most importantly, the deposit you have available, will determine the rate engaged.  Given the competitive nature of the home loan market, significant differences in rate are unusual but if you approach only a single bank, you may not receive your best rate. While the rate of interest is an important consideration, one cannot lose sight of other considerations when deciding on where to place your home loan business.  The savings possible through use of an access facility could easily outweigh a small rate premium.

Please contact us if you require any further information or would like to apply for finance:

Complete this short form online

011.327.4489 / 0861 1111 93

morne@mortgagepluscc.co.za

www.mortgagepluscc.co.za

Building Loans in South Africa

Definition:

A building loan is a loan granted to an applicant (borrower) for the purpose of erecting a building on a vacant stand. The building loan may include the purchase of the stand.

In some cases the applicant may already own a stand (i.e. It is already registered in his / her name) and the loan will only be required to erect the buildings.

After the bond has been registered the proceeds of a building loan are paid by means of progress payments, that is, the money is advanced in stages after completion of a certain portion or portions of the building.

Requirements when applying for a building loan:

1. Completed home loan application form

2. Supporting documentation (as required when applying for a home loan) i.e. Proof of income, proof of identity, bank statements etc

3. Land & building contract

4. A copy of at least the submitted building plans i.e. already submitted but not yet approved by the local authority

5. Schedule of finishes

6. Quotes / tender from the builder

7. NHBRC Registration certificate (Builder)

8. NHBRC Builders Enrolment Certificate (Property) – prior to registration

Rate & term options:

The interest rate applicable to a building loan during the building process is normally the prime variable rate plus a risk premium. Once all progress payments have been made, the client will then enjoy the rate the bank offers.

Retention:

Once the valuer does the valuation report, he will put on a full retention on the building portion of the loan & will thereafter make progress payments. The valuer may place a full retention on the loan, requiring certain documents e.g. NHBRC certificate or unit enrolment certificate.

Progress payment:

A progress payment is a payment authorized by the client and released by the valuer to pay the builder at certain stages of the building process. It protects the client against the builder walking away with all the money prior to completion of the building.

Progress payments are normally paid out at the following (minimum) stages:

• ? Foundation
• ? Roof level
• ? Finished project

(More progress payments can be done!)

Unique Costs:

• ? Drawing plans to be approved.
• ? Minimum fee for approving building plans.
• ? Local authority rates and taxes which must be paid during the building period – even if no one is living in the property after the purchase of the stand.

Interim Interest:

The bank will only pay out for work that is completed or materials actually used and will retain adequate money for completion. There are usually three or four progress payments to the builder prior to the completion of the house.

Interim Interest will be calculated on the loans daily balance that are made up of progress payments, any costs paid out as well as previously charged interim interest. It is important that the client budgets for this – if he does not pay the interim interest, there will be a shortfall at the end when the final payment is made. The customer should make part payment as soon as the first progress payment is made, to cover the interim interest. Provision must be made to cover the interim interest that can mount up during the building period. Failing this, the client will have to pay the shortfall when the last progress payment is made.

THE BUILDING LOANS PROCESS:

• ? The completed building loan application form, duly completed by the client, plus all the supporting documents (as mentioned above), have to be submitted to bank for consideration.
• ? If the building loan is granted, the bank will instruct the attorneys to register the mortgage bond, the costs of which are payable by the client.
• ? No payments will be made to the builder prior to registration of the mortgage bond.

THE OBLIGATIONS OF THE CLIENT ARE AS FOLLOWS:

• ? Inform the builder and the bank of any problems, concerns and delays.
• ? Sign progress payments only once the client is satisfied with the work done. At own expense clients can obtain expert advice if necessary – do not rely on the bank assessor only.
• ? Repay the building loan in monthly installments (Interest is charged at Prime Lending Rate on the Mortgage Bond from date of registration until final progress payment is paid out).
• ? Sign debit orders, stop orders or other payment instructions to pay the monthly installments – these can be processed to a current or savings account.
• ? Submit the electrical compliance certificate and the certificate of occupancy.

THE OBLIGATION OF THE BANK ARE AS FOLLOWS:

• ? Provide finance.
• ? Pay the builder on instruction of the client, but sufficient funds will be retained to complete construction.

? NB: The bank will always retain sufficient funds to complete the project irrespective of how much work has been done or the current value of the property.

THE OBLIGATIONS OF THE ASSESSOR ARE AS FOLLOWS:

• ? Assess the property using the plan, schedule of finishes, specifications and the building contract.
• ? Structure the retention amount and progress payments.
• ? Monitor the progress.
• ? The Assessor will always retain sufficient funds in order for the completion of the project.

THE OBLIGATIONS OF THE BUILDER ARE AS FOLLOWS:

• ? Conclude a building contract with the client.
• ? Build according to the contract and plans.
• ? Register with the NHBRC.
• ? Enroll the property being developed and pay the required enrolment fee. This fee may be included in the contract price.
• ? Provide all-risk policy until completion of the building.
• ? Provide waiver of lien – whereby the builder waives his rights to the property upon completion.

THE FUNCTIONS OF THE NHBRC ARE AS FOLLOWS:

• ? Register the builder.
• ? Issue the builder with an enrolment certificate.
• ? Ensure defects are made good.
• ? Investigate claims and complaints made in terms of structural defects.

WHAT ARE PROGRESS PAYMENTS? (Also known as draws or disbursements)

• ? Payments made by the bank, on instruction of the client, to the builder from time to time based on the progress of the building.
• ? Payments are only made on the client’s written request on the prescribed Request for Progress Payment form, signed by the client (all the mortgagors) personally.
• ? Clients are often requested to sign the above forms up front – this should never happen, as the client will not have control over the frequency of payments made to the builder!

IMPORTANT INFORMATION:

• ? The bank does not choose the builder. The building contract is between the client and the builder, and the bank is not a party thereto. The bank will not be liable for any act or omission by the builder, nor for any loss, defect or faulty construction work of any nature, or for any digression by the builder from the plans. Even if the assessor approved the work, the client remains liable to pay the full monthly installments.
• ? The assessor is representing the interests of the bank and the purpose of his inspections or assessments, is to determine whether there is building progress for the bank’s purposes and whether the property constitutes adequate security for the loan only and not to protect the interests of the client or to inspect and point out any defects of any nature whatsoever. The client is not to rely on the banks assessor when authorizing payment. The bank will not be held accountable if there is a value shortfall between the assessment amount and the client’s independent valuation, as the assessor is protecting the interests of bank. The Assessor will always retain (hold back) enough funds to complete the project.
• ? Interest is charged from the day the first progress payment is made and it is advisable to pay all this interest as soon as possible before the first installment is due to prevent any decrease in the retention amount and an increase of the interest due. Non-payment of this interest will reduce the amount available for building purposes (this normally becomes evident at the end of the project) and the client will have to obtain additional finance to pay the builder to complete the work if there is a shortfall.
• ? The bank cannot provide an electrical compliance certificate or certificate of occupancy and is further not obliged to provide these certificates.
• ? It will be in the client’s interest to visit the building site regularly to determine if the work is done according to the building contract, building plans and applicable legislation.

? All agreements and dealings between the client and the builder must be reduced to writing.

Please contact us if you require any further information or would like to apply for finance:

Complete this short form online

011.327.4489 / 0861 1111 93

morne@mortgagepluscc.co.za

www.mortgagepluscc.co.za