108% Home Loans

Private Property South Africa
Denise Simpson

Property ownership is becoming increasingly top of everyone's wish list and

the banks have become a lot more lenient in their lending policies by allowing

first-time and second-time buyers, providing their income can sustain the bond

repayments, to include all legal costs in their home loan application.

What are the costs?

When purchasing property, it is wise to remember that the purchase price is only

part of the cost that you will incur. Transfer duty applies on any price over

R500 000 and this is not forgetting that on top of the transfer costs there are

also the conveyancing attorney fees. Conveyancing costs are charged to put your

name on the title deed and will also include vat, deeds offices' fees, and small

miscellaneous costs. When a bond is applied for, the conveyancer will charge a

further fee plus vat to draw up the documents in favour of the bank. Over and

above that the bank will charge an assessment fee to value the property and a

once-off initiation fee.

All these costs can be added to your bond application, but the following

criteria will apply:

  • Minimum monthly income of R6000

  • Bond repayment must not exceed 30% of gross income

  • Age limit varies from bank to bank

  • Minimum loan amount of R100 000

  • Maximum loan amount varies from bank to bank and certain banks restrict

    the maximum to R1m, but it may be more depending on the bank.

  • Stable employment

  • Clean credit record

  • No retail arrears

Exclusions

The are following are excluded from applying for 108% bonds:

  • Vacant land

  • Business and commercial loans

  • Loans in the names of legal entities i.e. CC, Trust or Company

  • Some banks exclude switches from other banks while some will actually

    pay the bond cost to switch, providing the client goes directly to the bank.

Interest rate concessions on bond costs

This varies from bank to bank, but to give you an example, the bank will give a

discounted rate on the 100% and base rate on costs, so it is best to check with

the bank of your choice on how they work. Some banks will even allow you to opt

for a fixed rate - just keep in mind that it will be much higher than the base

rate at that point in time.

What about an access facility?

A question frequently asked by first-time buyers is "can I have an access

facility?" The answer is that this will only be an option when the risk to the

bank is reduced to less than 100% and there are two ways that this can happen:

  • The loan is reduced because all the costs are paid by you (you can

    access the balance up to the 100% portion).

  • If the value of the property has increased significantly, all you need

    to do is enquire at the bank you are dealing with and request to have your

    property re-assessed.

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