by admin | Oct 10, 2014 | Debt management, Featured Articles, Home loans
A second bond over your property can essentially be used for anything you wish to use it for but is most often used to add rooms, renovate, install paving or fencing. Typically people use their second bond to improve their homes but what we are seeing more and more of is people using the money from their second bond to settle existing debts and reduce their debt repayments. This is commonly known as debt consolidation
The reason people are able to use their second bond for anything or as a debt consolidation tool is that when you apply for a second bond, the bank values your property at current values and if there is an increase in value and the credit department is satisfied that you will be able to repay the increased bond amount, then they will give you the money.
If your application is turned turned down due to the amount of debt you currently have and your intention is to repay that debt with the money from the second bond and effectively reduce your monthly debt repayments, it makes sense that the bank should grant the second bond. In this case you need to prepare a file of all of the debt that want to settle with the second bond and do a spreadsheet showing the principle amount, monthly fees, interest rate and monthly interest charges and the capital repayment amount, giving you a total for each short term debt. Make an appointment with the bond originator or your bank and present the file and spreadsheet to them as a way of motivating the approval of the second bond.
When seeking loans from banks it is very important to show them that you are willing and able to repay the loan, are in control of your finances and are taking control of your financial destiny. Getting a second bond can give an indebted family a second chance and the money should be used very wisely.
If you have ever been given the opportunity to settle bedt and effectively been allowed to breathe again by using your second bond as a debt reduction tool, you will know the value of reducing the capital amount with every spare penny that you have, just in case you might need a cash injection in the future. We just never know what could occur, a family member might need help, you may be retrenched or want to start a new business or your child may need to go overseas to compete and chase their dreams. having access to cash at any time from your second bond could just be what makes it all possible.
by admin | Sep 30, 2014 | Bond application, Featured Articles, Home loans
Getting a bond pre-approval before you go shopping for your home is the the very best way to negotiate from a position of strength and when making what is likely to be the biggest investment of your life, the position you want to be in right from the outset.
With a bond pre-approval by the banks you are effectively walking in to a negotiation with fist full of cash. You know exactly how much the bank is willing to lend you for your bond and the seller has no idea how far to push you. He also knows, or at least his agent will know that as the holder of a bond pre-approval certificate you are a very serious buyer and not just a tyre kicker.
So to set you off on the right path, use bond originators to collect the documentation required by the banks. The originators will then prepare the documents for submission to the various banks, follow up on the progress, negotiate the best possible rate for you and then come to you with the bond pre-approval criteria from the various banks.
Always read the offers presented by the banks, not all of them will be the same rate and some may even offer reduced conveyancing fees or other benefits to get your business. One thing that is always a good one to check and is very simple to get pricing on is the Bond Insurance. You will know within minutes if the cost of the bond insurance is better or you can save a bit every month on your bond.
Either way, when you are armed with a bond pre-approval, you will receive the very best service from any of the estate agents you use as there will be no doubt about your ability to have your bond approved. As I stated above, a bond pre-approval is as good as a fist full of cash when you are buying a home, so use the high ground to negotiate a great deal for yourself.
by admin | Sep 9, 2014 | Featured Articles, Home loans
With so much emphasis being placed on small business being the driver in the economy and effectively our Government looking to small business to help achieve the 6% plus growth rate required, you would think that it would be easier for small businesses to get funding number one and then of course for the small business owners to be able to enjoy property ownership as major drivers of the economy.
We understand that banks are risk averse and there is strong evidence on the high failure rate of small businesses but for goodness sake, draw the line somewhere so that small business owners know what to aim for. For example, be less stringent with a small business owner who has been in business for 5 years or more, has shown steady growth over a period of time or something similar. Self employed people seem to be simply stamped “NO” as soon as the banks credit vetting departments see you are self employed.
So how do you get a bond if you are self employed?
Statistics show that only about 40% of self employed individuals were granted bonds in 2013 and I suspect this was the self employed people with larger businesses than the average guy who runs a small business.
The crucial element in my mind is to show that you receive fixed amounts into your personal bank account on a monthly basis and preferably on the same day of every month. This would show the bank that there is consistency over a long period of time and if these salary/drawings payments are backed up over a long period of time with stability in the companies books, I can see absolutely no reason why the motivation for approval should not be put forward.
Prepare your personal expenses as well as providing management accounts, financial statements and any other financial information that will make the person reviewing your bond application take a harder look at the application. make your application stand out… make a thick file full of supporting documentation. You know you can afford it, help the bank understand what you know.
Of course you need to make sure that your credit history is clean and in good standing and of course that the company also has a solid positive credit history.
The best way to get your bond approved would be to use a bond originator who will help you prepare the paperwork for the application and has a vested interest in your bond being approved. Bond originators make a small percentage commission on the value of bond once registered so they are as keen to see you get a bond approval as you are.
The next step to making sure that your bond costs you less is to get Bond insurance that is the lowest you can possibly get. Request bond insurance quotes.
by admin | Jun 11, 2014 | Featured Articles, Home ownership
The most common types of properties sold in South Africa are freehold and sectional title but could be a 99 year leasehold or share block. The most common uses of 99 year leases and shareblock are for holiday type properties where there are multiple owners per home or the property is situated in a reserve where the land is leased from a Government body like National parks.
Freehold
Freehold means that you own the land and everything on the land. The only requirement is that you have to pay rates and taxes to the municipality according to the value of the land and buildings. The ownership papers are in the form of a Title deed.
Sectional title
The properties that fall under this section are usually flats and townhouses where there is common property like a clubhouse, swimming poll and gardens for everyone’s use. This means that you own only the inside of the house up till the ceiling. The body corporate (which are made up of all the owners of the individual units), owns everything on the outside of the house as well as the land on which the house is built. They also own the boundary walls, the roof and all the outbuildings on the land which are referred to as common property.
The body corporate charges the individual section owners the expenses in the form of a levy. These expenses include municipal rates, the insurance of the building complex, all repairs and maintenance done, communal water and electricity bills as well as accounting fees. These are just to name a few. So not only do you have to budget for your home-loan repayments you also have to budget for the monthly levy. As from July 2008 all sectional title units will be charged separately and you will receive your own account from the local municipality.
Before you decide to buy into the sectional title complex, make sure you get the latest financial statements from the body corporate to make sure that it will be a financially sound investment and that there are no debts to be covered. As an owner in the sectional title scheme you are responsible for a portion of that debt/forthcoming expense. If it has not been adequately catered for a special levy will be needed to cover the expense/debt. Always ask the question “has a special levy ever been imposed and if so, what was it for?” Also make sure that the house rules being enforced by the body corporate are reasonable and in line with your expectations.
99 Year leasehold
The home owner of this type of home ownership will never own the land. The land is only leased to the home owner for a period of 99 years. If you decide to buy the house from and existing owner and the real owner is not government or a municipality, you only buy what is left in years on the lease. If the land is owned by the government the 99 year lease period will begin afresh with every new change of ownership. The land will remain the property of the municipality or government but often comes with an optional renewal.
Share block
This form of property ownership applies to a small number of blocks of flats/townhouses and was a method of selling property adopted by the Timeshare industry where there are up to 104(weeknd ownership and midweek ownership) owners per unit. Here the property is registered on the name of a company. Once you purchase a flat you become a shareholder in the company and are then entitled to occupy a particular unit (flat). The proof of ownership is then a share certificate instead of a title deed. As in the case of the sectional title, the expenses of the share block company will be divided among the shareholders. To make sure that this is a financially sound investment get an accountant to check the latest financial accounts before you decide to buy into a share block. But be warned that no bank or financial institution will grant a mortgage loan when the property is held through a share block scheme, developers often finance the loans in-house at higher than normal interest rates.
by admin | Jun 9, 2014 | Bond application, Featured Articles, Home loans
Second bonds or further loans, is money that you loan on top of the original bond amount, based either on what you have repaid in the capital amount or an increase in the value of your property, or a combination of both. If your second bond or further loan application is accepted you can use this money for basically anything from home renovations to buying a new car to paying your child’s school/university fees.
A second bond is making a loan on the money that you have already paid for on your existing bond. The difference the amount originally registered over your property and the current balance can be made available for your use should your bank see you as a good risk (Your payment history will be one of the determining factors in this). It generally takes a good couple of years of paying interest or if you are very lucky your property value will have increased significantly, before a usable amount will be available to claim on from the capital amount.
The procedure is very similar if the value of your home has increased and you wish to increase the amount of your original home loan.
It is important to note that you may also make use of a bond originator to make the application on your behalf. This can often take a lot of the headaches of dealing with a bank directly out of the equation and help to speed up the process as the bond originator will not make the application unless he feels your chances of success are very good.
Documentation required for application (The financial institution may request additional documents)
Employed applicants with a fixed monthly salary
- A copy of your ID
- Most recent Payslip
- 3 months bank statements
- Statements of your personal assets and liabilities
- A personal monthly expense statement
- A copy of your water and lights account
- A bond statement
Employed applicants with a Variable income
- A copy of your ID
- Latest 6 months consecutive payslips
- 6 months bank statements
- Statement of your personal assets and liabilities
- A personal monthly expense statement
- A copy of your water and lights account
- A bond statement
Self employed Applicants
- A copy of your ID
- Letter from auditors to confirm income
- 2 years financial statements signed and audited
- 6 months personal banking statements
- 6 months business banking statements
- Statement of your personal assets and liabilities
- A personal monthly expense statement
- A copy of your water and lights account
- A bond statement
The Qualifying criteria to apply for a second bond/further loan are:
- You must have an existing home loan account
- Your home loan payments must be up to date and have a good track record of payments
- There should be sufficient equity in the property
- You have to qualify for the extra amount that you require from an affordability perspective
- You cannot be on ITC, and you must have a good payment record.
- The second loan/further loan will be done as per the normal home loans procedures for the credit approval.
Legal Entities
- Copies of Id’s for all the members, trustees or directors
- The minimum documents required as mentioned for Employed and self employed applicants
- The companies registration documentation / the trust deed / and the articles of association
- 2 years signed and audited financial statements.
We have only mentioned the bare minimum requirements and should the bank need additional documentation they reserve the right to request it but with the above guideline you are well on your way to application success, but above all, be very honest with yourself and ask the question, “Can I really afford the additional payment?”
If you are not 100% sure that making the extra commitment will be easily affordable, try using the debt reduction calculator that will help you determine which debt to reduce and pay off before you increase your bond payments.
by admin | Jun 5, 2014 | Bond application, Featured Articles, Home loans, Home ownership
Selling your property involves yourself, the buyer, the bank and various attorneys. Understanding the process will make it less stressful for you and give you the opportunity to prepare all the required documents to speed up the process and have the necessary cash available when required. (yes, it does cost you money upfront to sell your property)
Before you put your property on the market, please check the home staging article to ensure you get the best possible price.
The Selling process
Offer to Purchase
Once a buyer has signed an offer to purchase, in most cases it will be subject to a bond being granted by a bank, the buyer needs to apply for a bond with his bank or a bond originator.
Approval
Once the bond is approved the bank will advise the bond attorney to register the bond.
Transfer
You the seller will then advise the transferring attorneys to begin transfer of the property. The bank will then provide the transfer attorney with the title deed and the settlement figures if there is still a bond over the property. The transferring attorney requests a statement of rates and taxes from the local municipality. The local municipality will provide a figure which is approximately three months of your average rates and taxes which will need to be paid by you before the transfer can proceed. The bond and transfer attorneys correspond regarding the guarantees which stipulate the guarantee requirements for the draft deed.
Settlement
A guarantee from the bank is sent to the attorneys who will prepare to cancel the bond over the property once the guarantee has been received.
Legal
The transferring attorney will ask the buyer and the seller to come and sign the transfer documents. Once the buyer has paid the transfer costs, the transferring attorney then pays the rates and taxes as well as the transfer duty fees. Once this is done a bond attorney will then prepare all the documents for the bond together with the relevant account. Once all the documents have been prepared the buyer will sign them and pay the costs. Thereafter the bond attorney will prepare and issue the necessary guarantees and have them forwarded to the transferring attorney who will prepare the bond documents for the lodgement in the deeds office. Once the transferring attorney has received the guarantees, they will then be forwarded to the cancellation attorney. The cancellation attorney will get the consent for the cancellation from the bank which holds the sellers bond. When all the documents have been signed and all costs have been paid the transfer, the new bond and the cancellation bond documents are prepared by the respective attorneys for the lodgement in the deeds office. As per the agreement between the deeds office and the attorneys concerned all the documents are lodged. It usually takes about 2-3 weeks for the deeds office to check the documents before they are ready for registration by the attorneys on the same day.
The entire process can take up to three months in the absence of any hiccups.
How to avoid delay in your property transfer
All personal information of the seller and / or buyer must be provided
The seller must provide the details of the bank holding the existing bond.
The bond holder must provide the cancellation figures and the title deeds to the transferring attorney. (The seller can get involved to ensure it is dome speedily)
You must have the rates figures (local authority) and/or the clearance certificate (transferring attorney).
The buyer must pay the deposit timeously in terms of the agreement (if required).
All guarantees to be provided.
The buyer must pay the bond and transfer costs on time.
The seller must not delay in signing the transfer documents.
The buyer must not delay obtaining government capital subsidy approval or employee subsidy documents for new bondholders, and with any other requirements the bank might need.
The buyer must not delay in signing the transfer and/or bond documentation.
Try to have one attorney to handle all of the requirements.
