PROPERTY BUYER INFORMATION ALSO FOR FIRST TIME BUYERS - THE HOME BUYING AND FINANCING PROCESS - APPLY FOR A BOND ONLINE IN SOUTH AFRICA, DOCUMENTATION NEEDED FOR A BOND IN SOUTH AFRICA, home loan application, Mortgage home loan application, Home loan Approval, Property Transfer, Home loan Attorney contacts Transferring Attorney, Cancellation Attorney, Transferring Attorney, Cancellation Attorney, Documents prepared for the Deeds Office, 1st time buyers, Building your new home, Home Loan & Property Buying F A Q s, Supporting Documentation for a BOND APPLICATION/>

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1. The home buying and financing process

Purchasing a home and registering a home loan can be a stressful and lengthy process. It helps to know the processes and parties involved and the steps required for home loan registration.

Parties involved:
•  Seller
•  Estate Agent
•  Buyer
•  Mortgage Broker
•  Transferring Attorney (appointed by seller to transfer the property to the buyer's name)
•  Home loan Attorney (appointed by the bank granting the home loan)
•  Cancellation Attorney (appointed by the bank cancelling the home loan of the seller)

A single attorney can perform the bottom three transactions, but often there are at least two different attorneys involved.

1. Initiating the purchase

The buyer and the seller negotiate and sign an Offer to Purchase (OTP). The OTP, or Agreement of Sale, sets out the specific terms of the agreement between the two parties including details such as purchase price, deposit, date of transfer, occupational rental, etc.

2.  Mortgage home loan application

The buyer, usually through the services of a mortgage broker, applies for a home loan with various lenders. There are four basic stages to the home loan application process:

•  Submission - the mortgage broker submits your application to various lenders
•  Approval in Principle - the bank approves the loan subject to a property valuation and sometimes with other conditions attached
•  Valuation - the valuation takes place either physically or through computer aggregates based property description and recent sales in the area
•  Final Approval - the bank officially grants the loan

The application usually takes between three and seven working days.

3.  Home loan Approval

Once all, or some, of the lenders who received the application have approved the loan, the client will choose which lender they wish to do business with. The financing bank will then instruct the relevant Home loan Attorney to proceed with the home loan registration process. This can take up to three days. The mortgage broker will cancel the application at the other lenders.

4. Property Transfer

The seller advises the Transferring Attorney to transfer the property into the buyer's name. The title deed and cancellation figures are requested from the bank that currently has a home loan over the property (if applicable). A statement of rates and taxes is requested from the local authority. 

5. Home loan Attorney contacts Transferring Attorney

The Home loan Attorney advises the Transferring Attorney of the amount available for guarantees and requests the draft deed of transfer and guarantee requirements.

6. Cancellation Attorney

The Cancellation Attorney is requested to cancel the seller's home loan upon receipt of a guarantee for the amount owing.

7. Transferring Attorney

The transferring Attorney receives the title deed and cancellation figures and sends a copy of the deed of transfer and the guarantee requirements to the Home loan Attorney. The Transferring Attorney requests that the buyer and seller sign the transfer documents. The buyer pays the transfer costs and the Transferring Attorney then pays the rates and taxes and the transfer duty.

8. Home loan Attorney

The Home loan Attorney prepares the home loan documentation and the relevant account. The buyer signs the documents and pays the costs. The Home loan Attorney prepares and issues the necessary guarantees, forwards them to the Transferring Attorney and prepares the home loan documents for lodgement with the Deeds Office.

9. Transferring Attorney

Once the Transferring Attorney has received the guarantees, they are forwarded to the Cancellation Attorney.

10. Cancellation Attorney

The Cancellation Attorney obtains consent for home loan cancellation from the bank which holds the seller's home loan. 

11. Documents prepared for the Deeds Office

After all the documentation has been signed and the costs paid, the transfer, new home loan and home loan cancellation documents are prepared by the respective attorneys for lodgement in the deeds office.

12. Deeds Office

All the documents are lodged in the Deeds Office by arrangement with the attorneys concerned. The Deeds Office takes approximately 2 - 3 weeks to check the documents before they are ready for registration by all the attorneys on the same day.

13. Bank pays out the loan

On the day of registration, the bank pays out the loan in accordance with the guarantees issued.

Allow at least 3 months for the registration and transfer of the home loan.

2. Factors that delay the registration of a home loan

• Failure by the seller and/or buyer to provide personal information

• Failure by the seller to provide details of the bank holding the existing home loan

• The existing home loanholder delaying provision of cancellation figures and Title Deeds to the Transferring Attorney

• Delay in receiving rates and taxes figures from the local authority and/or the clearance certificate from the Transferring Attorney

• Failure by the buyer to pay a deposit (if required)

• Delay in the provision of guarantees

• Failure by the buyer to pay home loan and transfer costs on time Delay to comply with other requirements of the bank.

• Delay by the buyer in signing transfer and/or home loan documents

• When the Home loan Attorney, Transferring Attorney and Cancellation Attorney are three separate firms

• Delay by the seller in signing the transfer documents 

3. Supporting Documentation

The application form is only a small part of the documentation required to initiate a new home loan application. You will need to supply additional documentation in support of the application. This information varies according to the type of loan facility you want, the lender you wish to do business with and your personal financial situation. The following is a list of the documentation that most lenders will generally require to process your loan application:

All Applications

Companies/Close Corporations

Trusts

Copy of ID document

Copy of latest financial statements

Copy of the Trust Deed

Offer to Purchase

Details of all directors/members

Resolution advising who may sign the application form and all relevant documentation

Proof of Income

Salary slip if employed

Auditors letter or statement of assets and liabilities if self employed

Founding Statement

 

Close Corporation or Company certificate

   

Memorandum and Articles of Association

   

3 months personal bank statements if employed

6 months personal and business bank statements if self employed/company/CC or Trust

Resolution by all directors or members of the company or CC advising who may sign the application form and all relevant documentation

 

4. 1st time buyers

It is critical to enter the property market with a good understanding of how a property purchase works, how much you can afford to borrow, what the hidden costs are and how best to structure your finances to maximize savings.

Important factors:

• know what you can afford
• be aware of hidden costs such as transfer and registration fees
• thoroughly investigate the loan products and options available to you
• consolidate your finances
• arrange for all or part of your salary to be paid into your loan, as well as any additional income such as bonuses to save on interest repayments and pay off your loan faster
• stick to a workable monthly budget

First time buyer's loan:

Most lenders have products specifically tailored to enable the first time buyer to enter the property market. The distinguishing feature is that you can borrow more than 100% of the value of the property (up to 110%) to assist with deposit, registration and transfer fees:

Qualifications:

• 1 st time home buyers only
• clean credit record
• stable employment history
• minimum single or joint income of R 6 000 per month
• home loan repayments cannot exceed 30% of gross income

5. Building your new home

Building your own home has the advantage of allowing you to develop the home of your dreams. However, it is a time consuming and complex process involving several parties and a lot of additional paperwork. Most lenders have a specific product geared toward the construction of a home, commonly called a "building home loan".
A building home loan allows for periodic progress payouts at certain points during the building process, as opposed to a normal mortgage which is paid out in full on transfer of the property. This financing structure protects both the bank and the home owner because the building process is subject to periodic bank assessment before further funds are advanced to the builder. Progress payments are made by the bank subject to retention, ensuring that sufficient funds are retained in your account to complete the project.

The decision to build should be underpinned by the following two ground rules:

• Affordability:
Build within your budget. This will help you avoid the disappointment of starting to build your dream only to be thwarted by lack of funds. Do not allocate your entire budget upfront. Building is a lengthy process so keep funds available for unforeseen costs and inflationary price increases.

• Use the best suppliers:
Any lucrative market attracts its share of fly-by-night services providers. Property is no exception. Ensure that you hire the best you can afford, from architects and developers, to builders and contractors. Try to establish their qualifications and research their track records upfront, as this will allow you to avoid many potential pitfalls on the long road ahead.

Qualifications:

Along with the standard personal and financial information listed above, the following additional documentation is required to apply for a building loan:
• Provisional plans or working drawings from the architect or builder
• A signed building contract between yourself and the builder/contractor
• Schedule of finishes
• Proof of builder's NHBRC registration

6. Home Loan & Property Buying F A Q s

• To whom is my deposit paid?
Depending on the stipulation in the contract, the deposit is either paid over to the Estate Agency or the Transferring Attorneys as they both have trust accounts where your money is protected. Never pay the deposit directly to the seller or the individual agent and always insist on the relevant receipts.

• Can I claim interest on my deposit?
Interest on deposit is usually paid to you after registration of transfer. You can request that either the Estate Agency or Transferring Attorney holding the deposit act in your interest by arrange for the deposit to be invested in an interest-bearing account.

• To whom is occupational rental paid?
It is easiest to pay occupational rental to the Estate Agency or Transferring Attorney who will either pay it directly to the seller or into the seller's home loan account. You can pay it to the seller directly but may then be asked to provide proof of payment.

• How long will the transfer take to register?
This usually takes about three months from the date of sale, depending on the circumstances and due dates for the home loan grant stipulated in the deed of sale. Registration can be completed within 6 weeks to 2 months from the date of sale if there are no complications or delays from any parties involved in the deal.

• What is the cost of transfer and home loan registration?
There are schedules of transfer and home loan registration costs available from both estate agents and conveyancing attorneys. Transfer costs are based on the value of the property and whether you are buying as a natural person or legal entity such as a Trust, close corporation or company. Home loan registration costs are based on the total registered value of the loan.

• When must my transfer costs be paid?
Transfer duty has to be paid in advance and is usually due a few weeks after the date of sale. Any delay in making this payment will unnecessarily delay the transfer.

• Who will register the home loan?
All the banks have panels of conveyancers that they use for home loan registration and one of these will be instructed to register your home loan. Your mortgage broker will have special rates with various attorneys on the banks' panels and it is advisable to use one of those. Furthermore, if the transfer conveyancer is also on the bank's registration panel it will be expedient to let them do the registration as well.

• Who will contact me on registration ?
Your conveyancer's secretary should contact you on registration and provide you with a final statement of account. Your estate agent may also confirm registration. Finally, your bank will send you a letter advising you of the registration of the home loan and the date when your first installment is payable.

7. Supporting Documentation

The application form is only a small part of the documentation required to initiate a new home loan application. You will need to supply additional documentation in support of the application. This information varies according to the type of loan facility you want, the lender you wish to do business with and your personal financial situation. The following is a list of the documentation that most lenders will generally require to process your loan application:

All Applications

Companies/Close Corporations

Trusts

Copy of ID document

Copy of latest financial statements

Copy of the Trust Deed

Offer to Purchase

Details of all directors/members

Resolution advising who may sign the application form and all relevant documentation

Proof of Income

Salary slip if employed

Auditors letter or statement of assets and liabilities if self employed

Founding Statement

 

Close Corporation or Company certificate

   

Memorandum and Articles of Association

   

3 months personal bank statements if employed

6 months personal and business bank statements if self employed/company/CC or Trust

Resolution by all directors or members of the company or CC advising who may sign the application form and all relevant documentation

 

8. 1st time buyers

It is critical to enter the property market with a good understanding of how a property purchase works, how much you can afford to borrow, what the hidden costs are and how best to structure your finances to maximize savings.

Important factors:

• know what you can afford
• be aware of hidden costs such as transfer and registration fees
• thoroughly investigate the loan products and options available to you
• consolidate your finances
• arrange for all or part of your salary to be paid into your loan, as well as any additional income such as bonuses to save on interest repayments and pay off your loan faster
• stick to a workable monthly budget

First time buyer's loan:

Most lenders have products specifically tailored to enable the first time buyer to enter the property market. The distinguishing feature is that you can borrow more than 100% of the value of the property (up to 110%) to assist with deposit, registration and transfer fees:

Qualifications:

• 1 st time home buyers only
• clean credit record
• stable employment history
• minimum single or joint income of R 6 000 per month
• home loan repayments cannot exceed 30% of gross income

 

Read about building your own home

 

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