The South African "Bond" - "Home Loan" |
Commonly known as a "mortgage" in many countries,
South Africa refers to a home loan as a bond.
A bond is simply a loan made by a third party, typically a
bank, to the owner or prospective owner of a property. SA
HomeBuyers offers a fully independent bond origination service.
Our experts will complete an application form with you and
also guide you through the best type of mortgage and the associated
costs.
We submit your application to the 4 major South African banks
and then negotiate on your behalf to obtain the best possible
rate and conditions. The service is totally free of charge
to our clients as the banks remunerate us directly.
| When might you need a bond? |
House Purchase
Many people are unable to purchase a South African property
out of their own savings so require a loan in order to finance
the purchase. An application is made to a bank/ banks to gain
an initial agreement to loan and obtain an interest rate.
Once you are happy with the rate the selected bank is informed
and the verification process of income and the valuation of
the property take place.
If all the banks requirements are met, the loan is applied
for by the appointed solicitor, who will use the funds to
complete the house purchase.
NB When this is the case the bond should be set out
in the suspensive conditions of any offer to purchase that
is made.
Debt Consolidation
Often a bond represents the cheapest access to capital, via
a loan, that a homeowner can take.
In the event that the homeowner has built up debt at high
interest rates it may be possible to release some of the equity
in their property to repay these debts.
The process followed is very similar to that of house purchase
but obviously in this instance the house is already owned.
NB Care should be taken when choosing this route and
professional financial advice sought due to the fact you may
be extending the term of your debt and therefore the costs.
Also you may be turning an unsecured loan into a secure one.
Purchase of an additional property
With the advent of large increases in the value of property
in South Africa many homeowners have large amounts of equity
built up in their properties. This equity may be released
(subject to a lenders approval) and subsequently used as a
deposit or indeed to fully finance the purchase of a second
property, possibly for investment purposes or a holiday home.
NB Care should always be taken and advice sought as
to the feasibility and costs involved with this prior to making
a decision.
Home Improvements
Many of us purchase property with a view to improving or extending
it. Equity can be released in property in order to finance
any improvements (subject to a lenders approval).
Overseas Clients
Overseas clients should note that non-residents can only obtain
financing of up to 50% of the property purchase price as per
the current exchange control rules. However, once a permit
is obtained for temporary residence in South Africa - whether
this is for work or retirement purposes - this limit is increased
to 75%. In some instances, we have managed to obtain higher
amounts for our clients.
