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Established in 2003 to match the need for more independent home loan sourcing specialists, Bondsmart is backed by the financial muscle and resources of South Africa’s largest bond origination network.
Tapping into this network has freed us up to focus on offering a compact, independent home-finance service that’s arguably more flexible and quicker-off-the mark than most of our larger competitors. Our focus: to source great, affordable bonds, super-smartly!
We’re ‘big’ on one-to-one interaction with clients. Experience tells us that because the loan application process can be tricky, it’s smartest for you to work together with us (ideally face-to-face) when we fill out your bond application. Personal assistance, accuracy and sensitivity to your individual needs are what determine speedy and satisfying turnarounds. When Bondsmart consultants say they’re giving your application their undivided attention, believe it, they are…personally and 24/7.
Bondsmart is proud to work through Bondmatters who are led by Tanya Ryke. Tanya has more than 15 years of experience in the mortgage origination industry. If you wish to contact Tanya direct you are welcome to on 083 448 2694. Looking forward to taking care of all your home loan needs!
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Did you know: there are as about 30 different steps and 10 different parties involved in buying property? The good news is: with Bondsmart, you won’t have to deal with most of them!
But to fill you in – the usual course of events in home buying includes: your offer to purchase the property, applying for a home loan from a bank with Bondsmart, and the bank’s approval of the loan. This is followed by the transfer and other legal procedures, involving various attorneys, the bank, municipality, deeds office and others.
It all ends a few months down the line (probably after you’ve moved in) with the final registration of your home loan… congrats, you’re a homeowner, signed and sealed!
SMARTtip: Make a call to Bondsmart your first step. Our special agents will qualify you immediately – so you know for how much you can shop for.
All services offered by Bondsmart are free… but the moment your home loan is approved by the bank and your offer to purchase accepted by the seller, you will need to pay certain costs yourself – most of them upfront. These are standard fees, mostly required by law, that go to the Receiver of Revenue, the various attorneys involved, the loaning bank in some cases, and others.
These fees will normally include: a deposit, transfer duties, bond registration fees, bond initiationand monthly bond admin fees, interim interest, occupational rent and an initiation fee. Bondsmart will alert you to these costs and when they will need to be paid, but ensure that you make provision for them early on. Note: costs will generally total about 10% of the amount of your home loan (excluding your deposit).
Also figure in other/ personal costs associated with a move, including expenses for painting or alterations. And be aware of monthly Sectional Title levies, if you are buying a flat, townhouse or cluster home!
It all depends on what you’re looking for! South Africa’s various banks have different home loan products, with different interest rate structures that cover a variety of needs – from how much you want to pay, to how long you want to pay.
Tell Bondsmart what you need and leave us to interpret that info, and search out the best option on your behalf. As banking, property and loan experts, we have the all-round expertise to negotiate and motivate for the best deals and rates for you.
Two major types of home loans are most often used – variable rate and fixed rate, as well as other variations on the theme, which we’ll explain in detail. Better believe it – if there’s a loan product out there that’s better, smarter, more affordable for you, no matter how complex your needs, we’ll find it!
Not a whole lot, but the info needs to be accurate, current and bona fide. Various banks require different information when we lodge an application for you – depending on the amount requested and your financial standing.
Bondsmart needs some basic paperwork from you. Obviously first, details of the property you want to buy, then proof of your income and your identity document. We may also ask a bank statement or list of your monthly expenses, and one or two things are required if you’re a non-South African citizen. Besides that, all we need is a few minutes of your time with our consultant to collate the information, fill out your application and get the process rolling with speed.
Remember, if you have this information handy, our consultants can give you an idea almost right away as to what size of bond you will qualify for.
Bondsmart gets its fees from the banks by offering them a streamlined service that lowers their overhead costs.
You pay nothing extra for our service. In fact, dealing with Bondsmart means that you get impartial, dedicated advice, which costs you no more than if you approached the banks yourself.
No, a bank will offer you the same rate whether you used Bondsmart services or not. The bank decides on the rate, not Bondsmart. A Bondsmart consultant, however, will motivate your application to obtain the lowest possible rate on your behalf.
We track the application on your behalf, hence we are the point of contact once the application has been submitted.
You should receive confirmation within 48 – 72 hours.
Please note that the information provided does not constitute expert legal or financial advice. You should consult a professional legal or financial adviser for expert advice. We have only mentioned sections of the National Credit Act where they are applicable to the complaints we receive. The Act however contains many other sections and detail that may not have been mentioned. There may be other legislation that is also applicable. For more information and detail on other legislation and the act you should consult a legal professional. The purpose of the document is to provide you with practical information based on our experience. Each case we investigate is however assessed on its own merits.
This is indeed one of the most important and expensive purchases you will ever make. You should take the time to ensure that every aspect of the purchase is as clear and safe as possible.
In accordance with the National Credit Act the bank is entitled to charge you an initiation fee if your loan application is approved. The maximum amount the bank can currently charge is R5000 (Section 42 table B of the Regulations). Government taxes (VAT) are added to all fees charged.
When you apply for a home loan the bank will not necessarily inspect or value the property you wish to purchase. Banks often do so called “desktop” valuations. This means it will base its valuation on information it obtains from various electronic data sources. In these cases it does not physically inspect the property. If a physical valuation is done it does not necessarily check for building defects or any other problems with the property. The purpose of the bank’s valuation is purely to assess the property for itself as a credit security risk. The valuation is not in your interests and is not to protect you in any way. You cannot rely on the bank’s valuation or assessment. If you want to check that the property is in a good condition you must obtain an independent professional report from an expert. If you want to determine whether the asking price is reasonable you must obtain an independent opinion from an expert in the field. The banks do not provide these services or make any contractual undertaking to you in this regard.
As the valuation is purely for the bank’s purposes it is not required to provide its valuation to you and you have no right to a copy of it (even though you may have paid for the valuation as part of the initiation costs of the loan application).
Banks do not generally check whether buildings which are erected on the property you wish to purchase have been approved by the town council or not. It is in your best interests to check that all improvements to the property have been approved before purchasing the property.
Any disputes you may have regarding any defects in the property must be taken up with the seller/developer etc.
The bank will assess your ability to repay the loan based on the financial information you provide. There is no law which dictates to the bank the exact circumstances when it must grant a loan or reject it. It is purely within the bank’s discretion whether or not to grant a loan (it may of course not discriminate on the basis of gender etc in terms of the constitution). No institution can force a bank to grant a loan. The National Credit Act requires the bank to assess your income and expenditure (Section 82). The bank can be held liable for reckless lending if it approves a loan application under circumstances where the financial information provided makes it clear that the applicant cannot afford the monthly repayments on the loan at that time (section 80). The basis on which the assessment (credit scoring method) is conducted is up to the bank. Based on the financial information you have provided the bank must assess whether you have sufficient surplus income to afford the monthly repayment at that time. You must therefore be brutally honest with yourself and the bank when providing your financial information. If you mislead the bank in any way or fail to disclose each and every expense you have then the bank may be fully protected against any allegations of reckless lending [Section 81 (4)]. If a bank rejects your loan application you are at liberty to apply for a loan at another bank. The fact that a bank rejects your loan application should however require you to evaluate whether you can realistically afford the loan. If you have doubts in this regard you should rather seek advice from a financial expert or consider purchasing a less expensive property.
When using a mortgage bond originator’s services please take the time to personally ensure that all the information they submit to the banks on your behalf is correct.
If the bank grants your loan application it will offer you a certain interest rate which is usually presented as a certain percentage above or less than the prime interest rate. For example – “prime less 1%”. If the prime interest rate is 12% at the time then the interest rate offered will be 11% per year in this example.
If you are in any doubt as to what the interest rate is ask the bank to clarify it in writing or on the loan contract.
If you were involved with negotiations with the bank regarding the interest rate make sure that the loan contract you sign at the attorney’s office reflects the same interest rate you negotiated. Once you sign the contract you are bound by it. It is highly improbable that you will be able to change it even if it is not the interest rate you thought you had agreed on with the bank before.
Before signing the loan contract please ensure that the loan contract clearly states whether the interest rate is variable or fixed and reflects what you negotiated with the bank. An agreement on a fixed rate is usually contained in a separate contract or page.
Fixed interest rates are generally only granted for a limited period – for example 12 or 24 months. One cannot usually change a fixed rate back to a variable rate before the time has expired. If the bank does grant such an application it may charge significant costs for doing so.
It is common for the banks to register a bond over your property for an amount higher than the actual loan amount. For example the loan amount will be R1m but the bond may be registered for R1.2m. This is done to protect the bank should you not make any payments at all on the account and the amount owing on the bond escalates beyond the original loan amount. You do not pay any extra interest on the extra R200 000. It is merely to provide extra security for the bank should you not pay the bond.
There is no law that we are aware of that prohibits the bank from doing this.
The bank appoints the attorney that will register the bank’s bond over your property with the deeds office. You cannot appoint your own attorney. You will further sign all the loan documents at this attorney. There are numerous documents that you will be required to sign. As these are very important documents it is in your best interests to read everything carefully before your sign. If there is something you do not understand ask the attorney to explain it to you. You can obtain your own legal opinion if you want to. The agreement between you and the bank is contained in the contract. Whatever the attorney tells you will be very difficult to prove and will not form part of the agreement. Never accept a statement like “just sign for now and we can change it or explain it later”. If there is something wrong or incorrect on the documents it must be changed before you sign – it cannot be changed later. Never sign any documents that have blank spaces that still need to be completed.
We often receive complaints where a loan application is applied for and approved and the applicant then realises that he cannot actually afford the loan. In trying to cancel the purchase the applicant discovers that he can possibly lose the deposit paid on the property, will be held liable for agent’s commission or will be held liable for the attorney’s wasted costs. The applicant then wants the bank to review their application again and to reject the loan hoping that none of these costs will have to be paid.
Once you sign a loan application and it is approved the bank gives instructions for the bond to be registered. You can therefore be held liable for an attorney’s wasted costs if you wish to cancel the loan after the instruction was given.
The bank is only required to assess your income and expenditure when you apply for the loan. The fact that your financial situation may have changed thereafter does not require the bank to reassess your loan application again. Although the bank may do this of its own accord in certain circumstances you cannot force the bank or require it to do so.
If you feel you cannot afford the loan you can only cancel the loan by giving the bank notice that you wish to cancel the application. You can then possibly be held liable for wasted costs depending on the agreement signed with the bank. Depending on the purchase contract you signed with the seller/developer/agent you can possibly lose your deposit or have to pay agent’s commission. The bank is not a party to these contracts and cannot be held liable for any damages suffered in this regard. If you cancel the loan application you must inform the seller and the agent – the bank will not do this for you.
The banks will sometimes review loan applications granted to determine whether the applicant can still afford the loan. This is usually done where there is a long delay between the time the loan application was approved and the actual building of the property takes place. The bank’s contracts usually reserve the bank’s right to cancel the loan agreement under these circumstances. The National Credit Act further allows the bank to cancel credit agreements on 10 business days notice [Section 123 (3) (b)]. It may be in your best interests if the bank cancels the loan agreement as you may have found yourself in serious financial trouble due the fact that you cannot afford the loan. You are at liberty to reapply for the loan.
The National Credit Act prescribes the maximum amount that can be charged by the bank. Currently this amount is set at R50 per month excluding government taxes[Section 105 (1) read with section 44 of the regulations]. This applies to all loans granted after 1 June 2007. Although your original bond may have been granted before this time the act and the fees may apply to your loan if further loans or access facilities were granted on the same loan after this date.
The bank may therefore give you notice of its intention to increase its monthly fees and then increase it. In some cases the increase may be from R5 to R40. This is lawful as long as the total amount is not more than the maximum allowed by the act.
The National Credit Act allows a bank to cancel an access facility on a bond account by giving you 10 business days notice [section 123 (3) (b)]. This section applies to all mortgage loans irrespective of when they were granted. You can reapply for the facility if you want to. The bank will then assess your application from the start as a new application.
The National Credit Act allows the bank to charge you an early settlement fee if you settle and cancel a bond account earlier than the agreed period [Section 125 (2) (c)]. This will mostly occur where you sell your property and cancel the loan agreement. This fee is generally equal to the amount of interest payable over a period of three months. The notice period will usually start running from the time that your attorney requests the bank for a settlement amount on the bond. The actual amount eventually charged will often be less than this amount depending on when your attorney requested cancellation figures from the bank and when the bond was actually settled. The notice period given to the bank is deducted from the three month period.
If you wish to give notice to the bank yourself then please ensure that you do it correctly. Merely sending a letter or phoning the bank for a settlement amount will not generally constitute reasonable notice. The bank must issue you with a specific letter which states the settlement amount and all the conditions attached to it. The letter will usually state that the settlement is only valid for a specific period. If the bond is not settled during this period the termination interest charge will be levied in full. One can therefore not issue a general notice to the bank which then applies indefinitely.
Access to the account
Where a bond is registered in the names of both spouses or partners it is important that you
carefully monitor any access facilities on the account. We often receive complaints where the one spouse lodges a claim that he/she was unaware of the amounts being withdrawn from the bond account and holds the bank responsible for the loss suffered.
Where access bond facilities are applied for the bank will require the signature of both parties consenting to the facility. The consent may be contained in the bond documents signed at the attorney. It is therefore important to read these documents.
In cases where internet access to the bond account is granted the bank will require that both parties sign an agreement to this effect. The agreement will often grant internet access to one or both of the parties and will allow internet transfers from the bond account to the account of one of the parties. It is therefore possible that one of the parties can transfer large amounts from the account without the other party being aware of the transfers. It is therefore important that you monitor the account carefully in these circumstances. Once this agreement has been signed the bank does not carry any responsibility for the withdrawals made from the account.
It can happen that one party makes withdrawals from the bond account without any formal
agreement or consent by both parties. While the bank may possibly be held to be negligent in such a case it does not necessarily mean that the bank will be held responsible for the withdrawals made. It will often be required that the party lodging the claim must show that he/she was not aware of the withdrawals and that the money was not utilised for the common household. The bank cannot be held liable for the losses suffered if both parties received the benefit of the money. It is often the case that both parties are aware of the withdrawals and the use of the money but it becomes a point of contention when divorce proceedings commence and the division of assets and liabilities becomes an issue.
Claims such as these are generally very difficult to prove and a court of law is often a more
appropriate forum in which to lodge such a claim.
Insurance on a joint bond
We have received complaints where a bond is in both parties names, one of the parties pass away and it is discovered that there was only a life cover policy in place on the surviving party’s name. It is therefore important that you check that life cover policies are in place for both parties.
When applying for a mortgage bond agreement to build a property you must ensure that you are aware of all the requirements and conditions.
NHBRC
An application must be lodged with the National Home Builder’s Registration Council (NHBRC).
See www.nhbrc.org.za Fees are payable in this regard. The bank is not permitted to grant a home loan for building purposes unless the building project has been registered. The NHBRC issues a certificate in this regard. The bank’s attorney must have this certificate before the bond agreement can be finalised (Section 18 of the Housing Consumer’s Protection Act 95 of 1998). There many other legal requirements that must be complied with when building a home, such as town council approval for the building, inspections by the town council, electrical certificates, zoning requirements etc. It is in your best interests to be aware of all these requirements and to personally ensure that they are all complied with.
Progress payments
As the building commences the bank will require you to submit signed applications for progress
payments. The bank’s assessor will evaluate the amount of building work done on the bank’s behalf to determine the value of it in relation to the remaining amount available on the bond. The assessor will complete this information on the progress payment request form. Never sign blank progress payment forms. Only sign a progress payment application once you are personally satisfied with the work done up to that point. Do not rely on the bank’s assessor in this regard. You should only authorise the bank to make progress payments to your account. You can then pay the builder/developer. Payments should not be made directly to the builder/developer. Check the progress payment authorisation carefully in this regard. This process can however be dependent on your contract with the builder or the bank. The conditions of the loan or your contract with the builder may require you to authorise payments to third parties directly.
Bank’s assessor
The bank’s assessor only acts in the bank’s interests. You cannot rely on the bank’s assessor to
protect you from bad quality building or mistakes made in the building process. It is your responsibility to ensure that the builder builds in accordance with your requirements and the building contract you signed. The bank is not a party to this agreement and carries no responsibility for defects in the building. Obtain professional advice if you are in any doubt as to the quality of the building. If the bank’s assessor does pick up any building quality problems he may advise the bank not to make any further payments until the defects have been repaired.
Interest payable
As soon as any payments are made from the bond account for the land purchased, progress payments etc the bank will start to charge interest on the account. You are liable for this interest. If you do not pay this interim interest on a monthly basis then it will be deducted from the available funds in your bond account. This will result in you having less money available for your building project. You may then find that there is no money available on the bond and you have to pay the builder from your own funds. It is in your best interests to pay the interim interest and not to leave it until the house has been completed.
The bank will only require full payment of the monthly instalments on the bond once the building
project is completed and all the funds have been paid out. A specific date is usually set in the
contract for this purpose. As stated above however this does not mean that the bank will not charge interim interest. All this information is contained in your contract with the bank which you will have signed.
Build first then payment
When approving access to an extra amount on the bond for renovations, the bank will often require that the renovations be completed before it pays out the extra amount available. You may therefore be required to use your own money to complete the renovations before the bank will pay out the extra amount available on your bond. Check your bond agreement carefully in this regard.
Partial approval of loan
The bank will sometimes approve a mortgage bond agreement for a total amount but only allow you access to a part of the loan initially. You then have to reapply to have access to the rest of the loan. An example of this can be where the bank approves a loan of R1m. Access to R300 000 is granted for the purchase of the land. The consumer then later wishes to build on the property he purchased. He will then have to reapply to have access to the remaining R700 000 on the loan. The bank may reject the application for the remaining portion due to affordability problems which may have arisen in the meantime. Please read your contract carefully in this regard.
Settling the account
When settling the amount outstanding on the bond account please ensure that you give clear instructions to the bank as to what must happen with the account. You have a number of options in this regard.
You can choose to settle the amount owing but keep the bond account open. This means that you no longer owe the bank any money but the account remains open and the bank remains the bond holder as registered at the deeds office. You can then in the future apply for access to the account. You must however instruct the bank as to whether you want the insurance on the property cancelled or intend arranging your own home owner’s cover on the property. If you do not give any instructions in this regard the bank may continue debiting the account with home owner’s cover insurance and life cover which you must pay.
If you choose to cancel the bond account entirely then you must give clear instructions to the bank in this regard. The bank must then cancel all insurance policies associated with the bond account. You can arrange with the insurer that you will take over payment for the policies directly. The bank will instruct its attorney to apply for cancellation of the bond held at the deeds office. You will be required to pay the attorney’s costs in this regard. Once the bond has been cancelled the attorney will provide you with the deed to the property which you must store carefully.
Please be aware of the potential risks associated with purchasing repossessed properties from the bank or at auctions.
The purchase contract you sign with the bank will often contain a clause which states that the bank does not guarantee vacant possession. This means that the previous owners of the property, current tenants etc may still be living in the property and refuse to move. Even ongoing legal actions and eviction proceedings are often unsuccessful in removing the occupiers. Even if the bank manages to evict the tenants for you initially, there have been cases where they continually move back and intimidate the new owners. You may therefore end up purchasing a property that you are unable to occupy.
Tenants and occupiers of repossessed properties can remove various structures and fittings from the property and can cause significant damage to the property before they are evicted. As the purchase agreement usually states that the sale is “voetstoots” this means that you may have to spend a significant amount repairing the property.
We often receive applications from consumers to assist them in preventing a bank from repossessing a property or taking legal action. Please see our Consumer Information Note 1 – Financial trouble in this regard.
Selling the property just before the auction
We have received complaints where the bank has taken legal action, attached the property by acourt order and advertised the property for sale through the sheriff of the court. Just before the auction the account holder then produces a purchase agreement showing that the property has now been sold. The account holder then tries to have the sale of the property set aside or delayed. The bank refuses and the property is sold for a low amount. The account holder then claims the difference between the sale agreement amount and the auction price obtained.Once the bank has obtained judgement and a court order to sell the property in execution of the judgement debt it is under no obligation to accept the account holder’s notice (a signed purchase agreement for example) that the property has been sold. The banks are routinely exposed to various attempts by debtors to delay sales in execution and are therefore very reluctant to entertain such notices. Banks will however consider delaying a sale in execution if the seller/purchaser is able to produce a bank guarantee for the purchase price. It is however generally unreasonable to produce guarantees of this nature an hour or minutes before the auction and expect the bank to immediately suspend the auction. If you have no choice but to sell your property please do so as soon as possible. Once judgement has been obtained and the property is to be auctioned it is very difficult to suspend the process. There is no specific law which states that banks must sell repossessed property at a specific value or with a reserve price. The National Credit Act requires banks to sell repossessed vehicles as soon as practicable at the best price reasonably obtainable [Section 127 (4) (b)]. This section however relates to voluntary surrender of goods. Immovable property or mortgage bond accounts are not mentioned in the section. The section does however indicate how the National Credit act approaches the issue in general. The prices obtained at auctions are related to the highest bid a member of the public offers and can therefore be argued to be the best price reasonably obtainable. There is no law which states that the banks must operate a separate business which sells houses at market related prices. The prices obtained at auctions can therefore be very low and you will be held liable for the outstanding balance. In some cases the bank can decide to “buy-in” a property rather than allowing it to be sold for a ridiculously low price. This means the bank will buy the property at the auction and then attempt to resell it privately or through an agent. The bank has a discretion whether or not to exercise this option and cannot be forced to buy-in a property. There are numerous factors which can contribute to the bank deciding to buy-in a property. What would constitute a ridiculously low price is subject to the bank’s discretion – not the debtor. The bank is however required to credit the bond account with the eventual sale price obtained. The bank is not permitted to profit from a buy-in process. There are significant costs and risk involved when buying-in a property and trying to resell it – guard fees, arrears in municipal services etc. All these costs may be added to the account. Setting aside of court judgements We often receive claims where the account holder disputes receiving the various court documents from the bank – for example section 129 letters, summons, notice of default judgment, notice of sale in execution etc. They then request our assistance in having these court orders or judgements set aside. We do not have any jurisdiction over the courts and have no power to set aside court judgements. Once judgment has been obtained we essentially have no jurisdiction over the dispute. The rules and laws relating to court processes can only be challenged in a court of law. If you wish to contest the basis on which a judgement was granted you are at liberty to obtain legal advice on pursuing the matter in a court of law. We are generally unable to assist in this regard.
It sometimes happens that incorrect information is provided by the bank such as incorrect account numbers or incorrect addresses for the property. These errors can sometimes make it difficult to make payment to the correct account. It can further happen that the debit order for the account is not implemented and no payments are made to the bond account.
Errors such as these can and do happen and the bank is expected to resolve these problems as quickly as possible. Administrative errors such as these do not however entitle you to have arrears on a bond written off.
Where a problem of this nature occurs you are reasonably expected to save the instalments while the problem is being resolved. You should further actively participate in resolving the problem with the bank. As soon as the problem is resolved you can then make the required payment in a lump sum to ensure that you are not in arrears. Where the bank caused the error it can reasonably be expected to write off any arrear interest that may have accrued as a result of the error.
We sometimes receive complaints that a bond account has been incorrectly calculated and that the balance outstanding is incorrect. The account holder then requests that the bank recalculate the bond account from inception. The time period involved can span decades. This type of dispute is common where the bond account is in arrears and the bank has instituted legal action against the account holder. While we do try and resolve disputes involving specifically identified problems such as a missed payments, double debits etc we do not generally recalculate or reconcile accounts. Account holders are reasonably expected to monitor their account statements and report any problems to the bank within a few months at most. We will not generally recommend that the bank reconcile a bond account going back many years based on a general allegation that the balance is incorrect. Unless the account holder can identify specific and recent errors we are generally unable to assist in this regard. Account holders that believe their accounts have been calculated incorrectly are at liberty to have their accounts reconciled by a professional accountant and to submit the report to the bank if an error occurred. In the event of a dispute regarding the method of calculation a court will be a better forum to resolve the matter.
Basically your formal (and legally binding) money offer to buy a property, lodged with the seller’s estate agent. It may include provisos like: e.g. your request for immediate acceptance of the offer in exchange for full asking price, or the seller’s request for a certain time-period to consider the offer.
Applying for a home-loan:
Signed your offer? Then call us immediately and we’ll help you fill in an application and start the hunt for the home loan you need …ASAP. Our service is free – all we’ll need is some info from you. (See: What do you need from me now, further on in this section)
SMARTip: A seller’s estate agent may try to insist that you use their bond originator. Remember, it’s your legal right to choose this company yourself.
You’ve got it – the bank approves your home-loan! After this, the bank now gives the Bond Attorney the go-ahead to register your home loan – the process of buying your home is well under way.
SMARTip: From here on, you won’t need to do anything. The Bond Attorney will notify you of progress.
These next few stages of the story are quite complex and comprise various legal and other processes; a variety of documents, guarantees, official statements, approvals, signatures and official paperwork – all of which will involve a number of parties – including three different types of attorneys (Bond, Cancellation and Transferring attorneys) your Local Municipality and Deeds Office, and the Bond-lender. During this period you will need to sign a few documents and pay certain monies. (Briefly explained in the What’s it cost? section that follows). Sound terrifying? Relax – your Bondsmart consultant will tell you what you need to do from start to finish.
When a bank approves your home loan, it may also ask you to pay a deposit – which could be up to 20% of the total price of the property. Banks sometimes require this when they have no previous record of your credit-worthiness or financial standing. This money is paid to your transferring attorney, who keeps it in a trust account until the home is legally transferred to you. The good news: this amount earns you interest until the actual transfer occurs.
To register the property in your name, you’ll need to pay a compulsory government tax known as Transfer Duty – an amount determined by the purchase price. You pay the Transferring Attorney, who pays the Receiver of Revenue. This is the largest cost in buying property and can involve a substantial outlay of cash.
SMARTip: Besides the actual property price, transfer costs should be one of the first things requested from a seller’s agent. Add them to the price, for a realistic idea of what the home will actually cost to buy!
A registration fee, paid to your loan-lending bank and worked out according to amount of your home loan. You pay the bank’s attorney, who uses the funds to register the bond as security for the loan. It includes stamp duty, paid to the Receiver of Revenue.
A standard, once-off Initiation Fee is paid to the bank to cover the costs of setting up your home loan. A monthly Administration Fee will also be charged by the bank to deal with the normal admin of your loan. The fee, usually small, is included in your monthly repayment.
Expect to be charged interest on the amount of your home loan, from the day the bank advances the loan to you, to the date of your first instalment to the bank – a few days or as much as a month, depending on the date your bond is finally registered. Your Bondsmart consultant will advise you of this amount.
If you want to move into your new home before the official transfer comes through from the Deeds office (this can take a few months) you can rent the property (still in the seller’s name). The amount of rent normally appears in your Offer to Purchase document and is negotiated between you and the seller/ seller’s agent.
SMARTip: If transfer of the property takes place before you move in, then the seller will need to pay you occupational rent.
It’s common practise that any bond-lender will insist on a professional assessment and valuation of a property before a loan is granted. This important inspection attracts a once-off fee from the bank.
Removals: When budgeting for a move, consider the compulsory costs but also figure in the practical, personal costs – like the move itself!
SMARTip: Move during off-peak times if you can – just check that the saving you make this way isn’t cancelled out by paying more occupational rent. Alterations/ Improvements: Buying a home that needs urgent work, or simply some painting, sanding, tiling etc? Deal with this before you move in if you can – especially if it’s going to involve work that makes living in the place impossible. It can also cost, so add a figure to your total outlay early on.
SMARTip: Talk to your Bondsmart consultant about including the costs of renovations etc in the amount of the home loan you apply for, and get the job done in one go. Sectional Title Levies: If you’re looking to buy a townhouse, apartment or a home in cluster development, be aware that you will need to pay a compulsory levy every month. It’s vital that you add this to your bond instalment to arrive at an affordable budget.
SMARTip: Always insist on full details from the seller, including a statement of the complex’s finances; and get a professional to check this out before you sign anything. Shared properties share some expenses – you will be responsible for these as a group!
This option is used in many home loans and is based on the Prime Interest Rate – which may shift (up or down) from time to time. If you apply for a home loan through Bondsmart, your consultant will apply for discounted rates on your behalf.
This option help to avoid any unforeseen changes to your monthly budget. Here, the rate is not pegged to the usual Mortgage rate and you and the bond-lender set a pre-determined term – either 12, 18, or 24 months, where the rate (and your monthly payment) won’t change at all.
Your copy of the Offer to Purchase (from the seller’s estate agent) has all the details we need, including address, erf no etc.
Banks all require this as a mandatory – principally to check your credit-worthiness and financial history before they loan you money. This will also help provide proof of your regular ability to pay your home loan. An official company Payment Advice Slip will normally be enough.
SMARTip: Remember, your application will in most cases be accepted, provided the bank is satisfied that the amount you will repay them monthly will be approximately 30%of what you regularly earn.
To work out the affordability of a particular home loan and how much, realistically, you can afford to repay each month, Bondsmart (or the bank) may request a list of your monthly expenses. If you are self-employed, a copy of your bank statement is required.
SMARTip: You can speed the application process up by compiling a list of monthly expenses yourself and passing it to us to check.
Please note that if you are not a South African citizen, different bond-lending criteria and conditions apply in terms of Exchange Control regulations, and specific documentation will be required. Please ask your consultant to outline what you will need.
