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Mortgage Advice – Let’s Bond Together Let us bond together “Let’s bond together” … Purchasing land or a property is a great investment and it is important that you have an understanding of the South African bond market and how the home loan industry works. For instance, the words “bond”, “home loan” and “mortgage” are used interchangeably in the market to describe a process by which your home is pledged as security or collateral in return for the finance to pay for it. The four major lenders in South Africa are First National Bank, Absa Bank, Nedbank and Standard Bank. These financial institutions predominantly offer their home loan products through specialized mortgage brokers or bond originators. This enables banks to offer their prospective clients dedicated and accurate bond advice and currently around 80% of all home loan business is conducted through bond origination companies like Mortgage Plus – 011 327 4489

5 Great Reasons to use a Bond Originator:

• Secure approvals: better chance of approval by submitting to multiple lenders
• Get the system to work for you: take advantage of the fact that each bank has different credit criteria, deposit requirements, documentation requirements, interest rates and turn-around times
• Expert positioning: prepare, motivate and package the application for the best chance of approval
• Best interest rates: banks compete for every loan application ensuring you get the best deal
• Simultaneous submission: direct interface to lenders systems allowing simultaneous submission of applications to multiple lenders

How the Bond process works:

If you are thinking about a new purchase it helps to understand the options available to you which ultimately saves you money. STEP 1: House hunting STEP 2: Sign offer to purchase. STEP 3: Seller accepts offer. STEP 4: Contact MORTGAGE PLUS. STEP 5: Financial Institution will confirm requirements. STEP 6: Property Valuation done by bank. STEP 7: Decision taken by bank. STEP 8: Final approval. (Letter of Grant) STEP 9: Registration attorney instructed to attend to the registration. STEP 10: Customer to sign documents at 2 sets of attorneys. STEP 11: Home loan registered in buyers name at Deeds Office. STEP 12: First monthly instalment due within 30 days of registration date STEP 14: Get your CASH BACK BONUS from Mortgage Plus. STEP 13: Title deed & sent from attorney to Bank for safekeeping. Many potential property buyers are currently in the process of shopping around for homes throughout South Africa. Should you require a New Home Loan or First time buyer home loan then kindly contact me to discuss.

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

What is FICA and does it affect buying or selling of property?

Answer: FICA stands for Financial Intelligence Act. The main purpose of this Act is to curtail money laundering. The act requires all lawyers to keep records of funds received from their clients, and to report any suspicious payments or transactions. In line with FICA, a property lawyers must therefore ensure that the funds received from their clients have not been obtained through any suspicious or illegal means.

What is a Deed of Sale?

Answer: A Deed of Sale is also called an Offer to Purchase. The Deed of Sale is the legal document detailing the agreement between the buyer and the seller. Ideally, you should have the deed of sale drafted by your conveyancing attorney. If that isn’t possible then make sure you have the deed of sale reviewed by your lawyer before you sign!

What happens to the money I paid as a Deposit?

Answer: The deposit will be held in a trust account pending transfer. You may consent to have your conveyancing lawyer invest this deposit, subject to the condition that any interest earned will be for your account. The funds held in a trust account opened by your conveyancing attoryeny are protected by the Attorneys Fidelity Fund. Note that some lawyers will charge a fee for this service.

Why does the transfer process take so long?

Answer: There are many steps in the transfer process. At any point in the process the Suspensive Conditions in the Deed of Sale could cause a delay. Suspensive Conditions are conditions that have to be met before the sale can be concluded. The most common suspensive condition is making the deed of sale subject to the sale of the purchaser’s existing property.

How long does it take to Register a Property in my name after I have signed the deed of sale?

Answer: The average time to register a property is between 2 and 3 months from when the conveyancing lawyer receives the instruction. However, conveyancing is a complex field. The length of time is dependent on the reaction time of each of these parties. There could also be suspensive condictions which delay the process. Unusual transactions e.g. the sale of a property from a deceased estate will take long.

What are Suspensive Conditions?

Answer: Suspensive Conditions are any conditions that have to be met before the sale can be finalised. For example: a buyer may make the purchase of a new property, dependent on the sale of his existing property. Suspensive Conditions need to be looked at very carefully, as they can cause delays in the registration of the property.

Is is better to Purchase a Property in my own name OR in the of a company. cc or trust?

Answer: The answer depends on many factors which you need to consider:

1. When purchasing a property from an existing owner, the transfer duty payable by a legal entity (i.e. the company, cc or trust) is much more than that payable by a natural person.
2. If a property is purchased from a developer then these costs are normally included in the purchase price and will be financed by your bond, rather than you needing to finance the transfer costs.
3. Capital Gains Tax is more when a property is sold by a legal person.
4. A property registered in the name of a legal person is better protected against creditors than one registered against a natural person.
5. A trust is very popular if the property being registered will be kept for many generations without selling (e.g. a holiday home).
6. Companies and trusts are often used in estate planning to manage the estate duty that is payable on a person’s death.

What is the Deeds Office?

Answer: The Deeds Office is the public office where records of property ownership and realted transactions are kept. There are different deeds offices for different regions.

May I take occupation of my property before registration of transfer?

Answer:Provided that all construction is complete (if the property is a new development) or seller has agreed to this condition (if an existing property), you may take occupation once your bond is approved and accepted. Keep in mind that you will have to pay occupational rent to the developer / seller, which is usually set at 1% of the purchase price.

If a deposit is required from me, when will it be payable?

Answer:The deposit is payable as soon as your home loan is approved by the bank. It must be paid into the appointed transferring attorney’s trust account and will accrue interest for your benefit. The attorney cannot proceed with registration until the deposit is paid. Should your deposit be “tied up” in a fixed term account, you must notify the estate agent of this before signing the offer to purchase.

When will my first bond instalment be payable?

Answer:Your bond instalments are payable from when the property registers in your name at the deeds office. Depending on the day of the month this takes place (Ex. before the 15th), your instalment might be payable at the end of that month or only at the end of the following month. The banks do change their criteria from time to time. It is therefore your responsibility as the bond holder to phone the bank’s call centre and verify these details. The estate agent is not permitted to do this on your behalf.

Can I purchase a property in South Africa if I am a non-resident?

Answer:A non-resident of South Africa is a person (i.e. natural person or legal entity) whose normal place of residence, domicile or registration is outside the Common Monetary Area. The Common Monetary Area consists of South Africa, Lesotho, Namibia and Swaziland. Non-residents may purchase property in South Africa but in terms of Exchange Control Regulation 3.1 (f) they may not be granted any financial assitance – eg. a bond. However, the South African Reserve Bank will consider requests by non-residents for bond facilities not exceeding 100% of your borrowing base.
The “borrowing base” of a non-resident is the sum introduced into South Africa to fund the purchase of a property. For instance, if as a non-resident, you wanted to purchase a property in South Africa for ZAR600 000,00, provided you are able to bring ZAR300 000,00 into South Africa to effect the purchase, you would be able to apply to the Reserve Bank for permission to apply for a bond of ZAR300 000,00. In other words, 50% mortgage loans are available to non-residents. It must, however, also be borne in mind that the banks will only grant a bond of 50% of their valuation of the property, which in some instances might not equal 50% of the purchase price. All requests of this nature must be routed via a commercial bank and not directly with the South African Reserve Bank.

You would need to provide proof of the fact that the funds have physically come into the country (which can be done by the Transferring / Conveyancing Attorney), so that when the property is sold, the deposit plus profit can be released. The title deed will be endorsed “non-res”. As a non-resident, you are not required to open a banking account in South Africa, although certain banks do insist on it, as this would facilitate the transferral of funds directly from your account abroad into your mortgage account in South Africa. If you open a banking account – particularly if an access facility is required for the capital paid off – then you would need to obtain an original letter of credibility from your bank. As Exchange Control is complex, it is advisable for non-residents to consult with an ooba home finance expert, to guide you through the process.

If I am a temporary resident in South Africa, can I purchase a property in SA?

Answer:Foreign Nationals (temporary residents) may apply for local financial assistance, including a bond for the purchase of residential property. Such a bond is not restricted and, depending on the standing of the client, it can amount to 100% of the purchase price of the property. The granting of any borrowing facility is subject to the approval of the Lending Manager in the branch of the bank where the foreign national holds his or her account. It is important to note that when a foreign national departs the Republic of South Africa, the criteria for Non-Resident purchasers will apply and the bond may have to be reduced to fall into line with the South African Reserve Bank’s formula requirements. Please talk to one of our experienced Mortgage Plus home finance experts to help you to negotiate your application for bond finance.

If I am a South African Resident working abroad, can I apply for bond finance to purchase a property in SA?

Answer:Yes, if you are a SA resident working abroad, an 80% mortgage bond can be secured. Most banks will look at granting up to an 80% loan but each application is reviewed on individual merit. Certain clients have been granted 100% finance, in exceptional circumstances.
You must only be living abroad temporarily and must have plans to return to South Africa. In addition, an application to emigrate must not have been made, nor should you have surrendered your permanent residency status in South Africa. Please consult one of our experienced Mortgage Plus home finance experts to assist you.

Why should I buy a house, is it not better to rent a property?

Answer:Statistics has shown that the property market has grown extensively over the last few years and that selling prices of property has increased each year, due to the increased demand for property. If this trend continues and many market annalists believe that it will, then the prices of property will gradually increase and the longer you wait the more difficult it will become to purchase a property.

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