Find out what you need to know when buying a home and applying for home loan finance.
There are many advantages of home ownership. Your home represents far more than
just its investment value. Homes are about families and securing the future for
your family is important. You can also borrow against your property's increased
value. Buying a home is probably the single biggest investment you will make in
your lifetime. It is not only a major financial commitment, but also an
emotional experience that normally results in an exciting change in lifestyle.
Whether you are building your own home or buying an established property, you
are investing in your future wealth and security needs.
Is the price right?
When house hunting you will need to determine your requirements e.g. what suburb
you would like to live in, what proximity to your place of work, schools,
shopping centres, medical facilities, and other amenities. Compare prices by
reading through property adverts and use the Private Property online comparative
market analysis - visit www.privateproperty.co.za and click on the "Price it
Right" link. This will allow you to check that a house is priced realistically
by drawing a report. SPI (Sold Price Index) reports are comprehensive reliable
reports that show what properties have been sold in a particular area, street or
complex within a specified time frame, what the sale prices were, who the owners
are and whether the properties are bonded.
What can you afford?
Do your calculations up front to ascertain what you can afford. This way you
will not be disappointed as you will know what price range to look in. A quick
calculation for mortgage lending affordability is to take 30% of your gross
income and this will give you an indication of what you qualify for. For
example, if you earn R20 000 per month your lending power is in the region of
R600 000. The instalment-to-income must not exceed 30% of your gross income.
Bonds can be applied for in joint names or in a legal entity.
What are the costs?
When applying for a home loan there are two sets of legal documents that need to
be drawn up, for which there will be a fee. The Attorney will collect the
transfer duty if applicable and give you an invoice for his fee. To put your
name on the title deed, there will also be a cost if a home loan is applied for,
as the attorney has to draw up a mortgage bond document in favour of the bank
who gives you the mortgage. All these costs can be applied for up front, either
from your bank or the originator you are dealing with to secure the finance.
The process from offer to purchase to taking transfer
Once the Offer to Purchase has been signed by buyer and seller, and the bank of
choice has granted a home loan, the property must be transferred to your name by
registration at the appropriate Deeds office.
Only an attorney, who is also a conveyancer, may attend to the registration of
transfer of the property and the banks are very selective as to whom they have
on their panel to do this transaction. A conveyencer is a qualified attorney who
has also passed a special examination in the Law and Practice of Dealing with
Immovable Property. The transferring attorney (normally nominated by the seller)
attends to the transfer of the property into the buyer's name on behalf of the
seller. One attorney can do both transactions, all depending on the buyer's
needs.
If there was an existing bond on the property that has been sold, the
conveyancer needs to cancel the bond that was in the seller's name, retrieve the
title deeds from the bank that is at present holding it, call for discharge
figures to cancel the existing bond, and advise the new bond attorney on what
amount the guarantee must be to enable the new transaction to be affected.
These transactions will happen once all costs are paid. The following
documentation will be needed for a smooth transaction and to satisfy the
Financial Intelligence Centre Act (FICA):
Copy of ID
Income tax number
Utility bill confirming address
Marriage certificate if applicable
Divorce agreement if applicable
All monies paid over to the attorney are held in an interest bearing trust
account, and the interest due to the buyer will be dispersed once the
transaction is complete. The bank that lends the money will advise you of the
completion of the transaction, remind you of your bond repayment amount plus
ensure there are sufficient funds to activate the debit order, which is one of
the banks' requirements for collection of repayments.
Now that your name is on the title deed, you become the lawfully proud owner of
the immovable property, earning the right to enjoy all the benefits of home
ownership.