Purchasing a home and registering a bond can be quite confusing. However with Mortgage Plus, your consultant will simplify the process, keeping you informed throughout the property transfer and will be on hand to give you professional advice until the day you move into your new home.

Here are some pointers that describe the house buying process and your involvement in it, as well as give you insight into some of the behind the scenes activities.

Assess your financial position

As buying, a property can be the biggest purchase you make in your lifetime, assess your financial position first, and make sure you are ready for this commitment.

See how much you can afford

It’s very important to know exactly what you can afford before you start house hunting. Mortgage Plus can offer you a free affordability assessment. We will also explain all the costs involved in buying a home, including up-front payments, monthly repayments and any other costs that may occur as a part of the property transaction. Follow the guide on the Cost of Financing a Home page to obtain an understanding of the costs involved in buying a home. It is important as the new National Credit Act wants to ensure you do not overspend and we can assist with a basic guideline on how to calculate the loan amount you can afford to repay monthly.

Choose an agent and view properties

Register with a few agents to ensure you are exposed to a variety of properties in your chosen area. Visit a number of homes before you make a decision. A Mortgage Plus consultant can assist you in finding a suitable agent in your area and will explain the different ownership options to you.

Sign an Offer to Purchase

Once you have decided on a property and signed an Offer to Purchase and the seller has accepted the offer and signed the document, the offer becomes binding by law and the transfer process can begin. There is however a cooling off period of 5 days for properties which are sold for less than R 250 000, to allow you a grace period to review the property and the costs involved.

Obtain finance through Mortgage Plus

Your Mortgage Plus consultant will submit your application and the relevant FICA documents to one or more banks, which will assess the value of the property as well as your financial position. The bank will apply the credit assessment criteria as required by the National Credit Act and the financial risk criteria as stipulated in the bank’s terms and conditions for lending.

Your Mortgage Plus consultant will then advise you of the offers they have obtained for interest rate and available loan amount, and will give you an informed recommendation.

Pay your deposit

Once you have chosen a bank, you will then (in most cases) be expected to pay your deposit to the attorneys dealing with the registration of your bond.

The property transfer begins

The bank will grant the loan and instruct the attorneys to start with the registration of the bond and transfer of the property into your name, as well as the cancellation of the seller’s bond. They will also obtain the title deeds and the transfer and tax clearance certificates. Registration, transfer and cancellation take place simultaneously and require the services of up to three different specialised attorneys.

Transfer documents signed and fees paid

The attorneys will complete the necessary administration. You and the seller will need to sign the transfer documents. At this time you will be expected to pay the transfer costs, registration fees and an estimated share of the rates.

Registration documents are lodged at the Deeds Office. This is where the property will be registered in your name. Congratulations, the property now belongs to you!

Home loan comes into effect

Once you have received notification of the registration, your bank will pay the seller, or their bank, and your home loan will come into effect. The bank will notify you of this in writing and inform you when your first monthly instalment is due.

Taking occupation

You may take occupation as per the date agreed on your sales agreement. If you are already occupying the property, you will no longer have to pay occupational rent.

Who is involved in the purchase of a property?

•             You (the buyer)

•             The seller

•             The estate agent

•             The transferring attorney (also known as the conveyancer) – appointed by the seller

•             The bond attorney – appointed by the bank granting the bond

•             The cancelling attorney – appointed by the seller’s bank, to cancel their bond

How can you speed things up?

•             Get pre-approval for your home loan

•             Provide all requested personal and financial information

•             Pay your deposit, if any, as well as bond and transfer costs on time

•             Sign all documents when requested

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

Buying a home is often the single biggest investment most people make. As a result it is essential for home buyers to ensure they are fully prepared before getting on to the property ladder. South Africa’s leading bond originators, answers ten questions  for new homebuyers to consider:

1.      How much can I afford to spend on a home?

Before you look for a home it is important to know exactly how much money you can borrow and, most importantly, what monthly repayments you can afford. Affordability should be used as the main factor in deciding the loan amount to apply for. Banks will generally be comfortable should you be able to prove that you have sufficient disposable income after tax and all your monthly expenses to meet the monthly home loan repayment. If the repayment on the property you are looking to buy requires you to cut your monthly expenses to unrealistic levels, your loan will likely not be approved. Your bond originator will be able to help you in calculating and determining what amount you should consider.

2.      Do I qualify for all the criteria that banks consider before awarding a loan?

Ensure that all your paperwork is ready for submission. Employment history is very important as it reflects a pattern of stability and income. For most lenders a consistent income stream is a key criterion when working out how much one can borrow. Lenders will also want to look at your credit history, so that they can see a historic pattern of borrowing and repayment as well as how you have managed you bank accounts and other credit facilities.

3.      Why should I consider a bond originator?

Bond originators specialise in shopping around with multiple banks to give you the best chance of getting your deal approved on the most beneficial terms. Banks all have very different criteria for assessing credit and in how they price loans, so the terms you obtain from one bank may be very different from another bank. The bond originator will work with you to ensure a home loan best suited to your individual needs.

4.      Will I benefit from being prequalified for a home loan?

When looking for a new home it is strongly advisable that you are pre-qualified to give you a good sense as to the value of the property that you will be able to purchase.  The pre-qualification process can also pick up credit issues on your record that would need to be fixed before you can formally apply to a bank. The pre-qualification process not only streamlines the home buying process, but also ensures the buyer is able to negotiate from a position of strength. Ask your estate agent or your bond originator to assist you with the pre-qualification process.

5.      In addition to the monthly repayments, can I afford the additional costs?

Make sure you are aware of all the costs involved in buying a home. In addition to arranging a home loan and potentially putting down a deposit there are a number of other costs involved including legal costs, transfer duty, bond registration fees and bank charges. These fees can stack up quickly and they have to be paid in order to complete the process.  Over and above these ensure you have taken into account all the costs of home ownership including your monthly rates, levies and costs of insuring your home.

6.      How can I get the best interest rate?

The lower the bank’s risk in lending funds to a consumer, the better the rate it will be able to offer. In calculating the risk, factors such as the loan-to-value ratio (the amount of deposit you are willing to put down to offset against the purchase price thus reducing the required loan amount), the size of the loan, as well as the repayment-to-income ratio (the ratio between the bond re-payment and the buyer’s income) are considered. Currently the size of the deposit is a key factor driving the rate at which banks are prepared to do business.  The size of the bond that you apply for, your credit history and the investment value of the property you intend buying are some of the factors that may affect the rate you will be offered.

7.       Consider fixed interest rate options.

With interest rates currently at 35 year lows, one may want to give consideration to fixing the interest rate on your home loan when you apply for a bond. Lenders will often set a fixed rate bond at a slightly higher level than a variable rate bond; however, if you are working to a tight monthly budget, a fixed rate option removes risk and might be a prudent decision.

8.      Can I afford to put a deposit down?

Besides improving your chances of getting your home loan approved, a deposit will result in a more favourable bond rate which will save you in interest over the term of the loan. As a home loan is paid back over a long period, generally between 20 and 25 years, even a small deduction in the interest rate on your bond, can save you thousands in interest payments over time. 100% loans are available, but the credit criteria imposed on 100% loans are very restrictive, and our advice would be to put down as large a deposit as you possibly can to ensure the best chance of home loan approval.

9.      Consider the location of the property

The old adage of location, location, location still rings true for most South African homebuyers. Buying in the right area now can reap dividends in the long term when you choose to sell the property. It is important to get some idea of what the area you are looking to buy in may look like ten years down the line, as the demographics of an area can change relatively quickly.

10.     Be Transparent

Always be completely transparent with your lender or bond originator. If you do not provide all the relevant information, likelihood is that the bank will pick it up and decline your loan. “Full disclosure” should be your mantra. Work with your estate agent and chosen bond originator to ensure that the property you are looking for is one that you can afford.

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