HERE’S TO MAKING AN INFORMED DECISION !

With the new Consumer Protection Act coming into effect on 1 April 2011, business sectors in all industries of trade have had to re-look their level of service, ensuring that they provide their clients or customers with all necessary information to aid them in making an ‘informed decision’. The use of plain language is especially important for this new Act, as often consumers don’t truly understand what they are binding themselves to.

Here’s a short-list of words that you might come across when applying for a home loan – the first step to buying your dream home – explained in plain language. The explanations below will make filling in your Application Form a breeze. That being said, the best way to ensure that your application form is filled in correctly, you can consult a mortgage consultant who will be able to take you through the procedure step by step.

APPLICATION TYPES

Individual – One person only is applying for a home loan that they will be paying for themselves

Multiple –  Larger groups of more than 2 people applying for a home loan

Private Company – (Pty) Ltd: A small company with few private shareholders apply for a home loan in the company’s name.

Public Company – A company which sells shares publically and has many shareholders applies for a home loan in the company’s name

Trust Company – A company formed to act as a trustee or to deal with trusts. A trust company does not own the assets its customers assign to its management, but it may assume some legal obligation to take care of assets on behalf of other parties.

Private Trust – An arrangement whereby property is managed by one person (or persons, or organizations) for the benefit of another. You may find this in Family Trusts. You can apply for a home loan in the name of your Family trust.

Surety – a person who assumes legal responsibility to pay for someone else’s debt should they become incapable of paying.

SOURCE OF INCOME

Donation/Gift/Winnings – If you have been lucky enough to win the lottery or receive a hefty cheque from your long gone uncle Scrooch, be sure to indicate this on your application form.

Inheritance – If you have received any funds passed on to you by a deceased family member, you need to indicate this on your application form by ticking the “inheritance” box

Investments – Do you have any investments that are regularly profitable? Tick this box if you receive money from investments

Pension – Over 65 and receiving pension every month? If you plan on using these funds to pay off a bond, you need to indicate so on your application form.

Policy – If you have a policy that pays out any funds to you on a regular basis, you can use it to pay towards a bond.

Salary – Most applicants will apply using the funds they receive from their salary which is normally paid on a monthly or fortnightly basis.

Offer to Purchase – An OTP is a formal document in which the buyer proposes to buy a property for a certain amount and under certain conditions. Once the seller accepts this proposal, a contract is created binding the buyer and seller to the conditions.

Documents required – When applying for credit, you will get asked to submit required documentation. Each person’s application differs but the basic required documentation remains the same for each applicant.

FICA

FICA is the Financial Intelligence Centre Act, 2001. The verification process for an individual investor includes obtaining the following documentation: Without these documents, your application will not be processed at all.

• A certified copy of your identification document
• Verification of your residential address through the provision of an certified/original copy of mail delivered to your residential address or a signed Affidavit from the owner of the property
• A cancelled bank cheque or a certified copy of your bank statements (6 months)

Property valuation – Once you have made an offer to purchase, the property needs to be valuated to determine whether the amount you have offered coincides with the value of the property. If the figures are synonymous, the Approval in Principle is drawn up.

Approval in Principal – After the property gets successfully valuated, the bank will deliver an Approval in Principal which will stipulate certain conditions including the loan amount and offered interest rate. You can now decide whether you would like to accept these conditions after which a Final Grant will be delivered.

Interest Rate – Currently, the Prime Interest Rate is 9%, the lowest it has been in over 10 years! Here’s what’s to keep in mind when it comes to Interest Rate.

Fixed Rate vs Variable Rate:

The interest rate on a fixed rate home loan does not change. This type of home loan is advantageous because you will be protected from rate increases and your monthly instalment will remain consistent. However, the disadvantage is that you will not benefit when the prime rate is dropping, which has been the case in the past few years. Also, a fixed rate will usually be slightly higher than the prime rate (at the moment of your application).

Final Grant

If you have accepted the conditions set out in the Approval in Principle, the Final Grant will be issued, which is the last step of your home loan application. Signing of the Final Grant binds you to the transaction and from here transports and registration of the property are handled by the chosen attorneys.

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

Step 1: How much can I afford?
The first step is to determine how much you can afford to pay every month.
Click here for more information on: Calculators
Home loan costs to find out more about the other costs involved such as transfer and registration costs, and stamp duties.

Step 2: Search for property
Once you have calculated how much you can afford to buy for, you need to determine what you are looking for in a home. These links will help you find a property.
Buyers checklist
Property search

Step 3: Sign offer to purchase
Once you have decided on the property you would like to buy, you will need to complete an offer to purchase . This document is also known as an agreement of sale or deed of sale. Basically, it is a written agreement, stating the terms and conditions under which you agree to buy or sell the property.

Step 4: Seller accepts offer to purchase
The offer to purchase has to be negotiated. It is advisable to note the fixtures and fittings that will form part of the sale. All the permanent fixtures and fittings such as light fittings, carpets, tiles, curtain rails, pelmets and built-in cupboards, are included in the sale unless the buyer and seller agree otherwise. Any movable items to be included in the sale must be negotiated between the buyer and seller. Once you have negotiated the offer, the seller will accept the offer to purchase.

Step 5: Approach us for a home loan - 011.327.4489
We will need a copy of the offer to purchase that you and the seller have signed, to finalise the approval process.
Click here for more information on specific criteria for freehold properties, building a home and sectional title properties. Building a home

Step 6: We will confirm requirements
Once we have the offer to purchase, a final credit evaluation is done
What is the criteria for a building loan or vacant land?

Step 7: Property valuation done
We carry out an assessment of the property before approving the loan

Step 8: Send required documentation for a building loan
You will need specific documents for a building loan. Click here to find out more.

Step 9: Decision taken by the bank
We will confirm your income, credit standing and assess the property before we consider granting the loan.

Step 10: Letter of grant
A letter of grant will be sent to you,Mortgage Plus, estate agent and your branch notifying you that the loan has been approved and what procedures to follow.

Step 11: Registration attorney instructed to register the bond
The registration attorney is appointed to attend to the registration of the bond.

Step 12: Signing of transfer and registration
You will need to visit your attorney to sign all the necessary documents. The transfer and bond registration fees need to be paid in full before the bond is registered in your name at the deeds office.

Step 13: Documents sent to deeds office for registration
Once all fees are paid in full the documents are sent to the deeds office.

Step 14: Home loan registered in your name at deeds office

• Registration attorney confirms registration
• Seller’s bond cancelled and settled
• Funds paid out to relevant parties

Step 15: Sign progress payments for us to release funds
As work on your building progresses, your builder will require payment. We will make these payments based on the estimated cost of building work completed, and after receiving a request form from you.

Step 16: Sign final letter of satisfaction on completion
On completion of the contract, when the builder calls for final payment, inspect the house to ensure it has been completed to your satisfaction. You will be requested by the bank to sign a letter of satisfaction, advising us that you are satisfied with the completed house.

Step 17: We will confirm instalment due in writing
For building loans: first instalment due within 30 days after 90% of the loan paid out on occupation

Step 18: Title deed and mortgage bond document sent to Bank for safekeeping

Remember by choosing us for a loan, you will get professional advice to make sure you are getting the best deal possible.

CONTACT US

Speak to a home loan consultant about financing your new property or reviewing your existing mortgage. We are able to assist in lowering your bond repayments and securing attorney discounts.

Complete this short form online
Call us on 011.327.4489
Email: morne@mortgagepluscc.co.za

www.mortgagepluscc.co.za