Home Loan Talk - Buying your own home

Private Property South Africa
Denise Simpson

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.

Looking to sell your home?
Advertise your property to millions of interested buyers by listing with Private Property now!
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