Helpful Information
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Navigating home financing is a complex yet thrilling process, whether you’re a first-time homebuyer or a seasoned property investor. As Property Investment Specialists, our mission is to simplify and clarify property finance for you, making your journey towards home ownership or property investment a smoother, more informed one.
For detailed insights, browse our FAQs below.
General FAQs
A bank-issued loan for purchasing a property involving long-term repayment and interest charges.
We don’t charge you a fee. We are remunerated by the bank whose home loan you accept. This remuneration is based on the bond amount. It covers our costs for the work involved and the time saved on the bank’s side.
- Your ID / passport.
- We will contact you to complete a consent to obtain your credit report.
- We then need your latest 3 months payslips and bank statements reflecting your income deposits.
- For self-employed individuals, in addition to the above, we require the latest 2 years’ annual financial statements for your business.
- The signed Offer to Purchase (Sale Agreement) for the property you are purchasing.
- Your ID / passport.
- We will contact you to complete a consent to obtain your credit report.
- We then need your latest 3 months’ payslips and bank statements reflecting your income deposits.
- For self-employed individuals, in addition to the above, we require the latest 2 years’ annual financial statements for your business.
Bank/Initiation Fee
This one-time fee is regulated by the National Credit Act and can be financed as part of the loan or paid separately. For individuals, the fee is R6,037.50. For entities, fees vary and are generally based on the loan amount.
Conveyancing Costs
Transfer (or conveyancing) costs are based on the property purchase price. Transfer fees are paid to the transfer attorney by the property buyer. These costs include transfer duty (tax) paid to SARS and fees for the transfer attorney appointed by the seller to handle the transfer of ownership process.
Bond Registration Costs
Bond (or registration) costs are based on the bond amount paid by the buyer. Bond attorneys are appointed by the bank whose home loan has been accepted by the buyer. This is generally paid upfront, but some banks may capitalise these costs to the loan.
Other Costs
You may be required to pay additional fees related to the property. The seller or real estate agent will be able to help you better understand what costs may be levied upfront, annually, and/or monthly (levies, membership fees, etc.)
Transfer costs need to be paid by the buyer to the conveyancing attorney before the transfer of property takes place. Usually within three months of the home loan being approved.
Bond registration is a once-off fee that the buyer pays to the bond registration attorney appointed by the bank. These fees need to be paid before the bond is registered. The registration process usually takes six to eight weeks.
The date of your first bond instalment depends on when the property registers and the debit order date the buyer selected when signing the banks bond registration documents.
Generally, if the Bond registered between the 1st to the 15th of the month: the first bond installment will be due from the 1st of the following month on the debit order date selected by the buyer.
Bond registered between the 16th to the last day of the month: the first bond installment will be due from the 1st of the after following month on the debit order date selected by the buyer.
Interest is calculated daily and compounded monthly on the capital balance of the loan. The capital balance is the current amount owing. If you reduce the capital balance by paying in additional funds over and above your monthly bond repayment, you reduce the capital balance and the interest.
However, this also depends on how the bank’s access facility works. The banks recalculate your monthly repayments differently. If your repayment stays the same, your term will be reduced. If your monthly repayment fluctuates depending on your capital balance, your term will remain unchanged.
Access to the advanced funds vary depending on how the bank’s access facilities work, but generally, the funds paid into your home loan over and above your monthly repayment requirements should be available for you to access.
Bond/Registering Attorney
The bond (or registering) attorney is responsible for registering the bond in the home buyers name. The bond attorney is appointed in favour of the bank financing the property, upon the buyers acceptance of the banks final grant.
Transfer/Conveyancing Attorney
Transferring (or conveyancing) attorneys transfer the property from the seller to the buyer. They represent the seller and are appointed by the seller.
Interest Rates
When you take a home loan from the bank and pay back the loan in instalments, you also pay an additional amount in interest. Naturally, you would want this interest to be as low as possible. Understanding the difference between a fixed and variable interest rate is essential.
Variable Interest Rates
A variable interest rate means your home loan interest rate can go up or down (depending on the prime market rate, which is determined by the actions of the South African Reserve Bank). Variable rates are for people who are happy to allow a little room for uncertainty, people who are more “willing” to gamble on market forces moving in their favour.
Pro: If the prime interest rate decreases in response to market forces, interest on your home loan also reduces, saving you money.
Con: The opposite could just as easily occur. Fluctuating interest rates can make it hard to budget accordingly.
Fixed Interest Rates
A fixed interest rate means that your rate is fixed, regardless of the market fluctuations. Fixed rates are for those who prefer to have everything mapped out when planning their budget; this is better for people who want to be able to budget with 100% accuracy.
Pro: You pay the same loan amounts monthly (for an agreed period) regardless of the fluctuations in the market. This enables you to factor your payments into your budget with 100% accuracy.
Con: Less risk for you, more risk for the bank, so banks are likely to charge you a higher rate.
Con: Fixed rates are approved for a fixed term, generally up to 24 months. When the fixed term expires you will either need to revert to variable interest rate or negotiate a new fixed rate and term with the bank.
This is a personal decision and is based on your risk profile.
Variable rates are linked to the prime lending rate. When prime fluctuates, so does your home loan interest rate and repayment; this can make it difficult to budget.
Fixed-rate loans are riskier for the banks; therefore, they price this into the rate when agreeing on the term.
Your interest rate is determined by the factors below:
- How much of a “risk” the bank considers you to be. Having a good credit record and putting a large deposit on the property will lower the banks risk and therefore your interest rate. A lower credit score and lower deposit (or lack of a deposit, as in the case of a 100% home loan) increases your interest rate.
- Market forces: as the market interest rate rises and falls, so does your interest rate.
- Market focus and how it affects the interest rate: The SARB (SA Reserve Bank) controls the repo rate (repurchase rate), which is the interest rate at which SARB lends to SA banks. This, in turn, determines the prime interest rate, which is the minimum rate at which banks will lend. The prime interest rate will be higher than the repo rate, in order for banks to make a profit on their loans. When the SARB lowers the interest rate, the banks lower their lending rate, and more people are likely to apply and qualify for loans.
- Each bank offers a different interest rate, some will offer better deals than others as they have different lending policies.
OWN Property Finance Specialists apply to all banks, including your own, on your behalf, allowing you to compare the deals offered by the various banks and choose the one with the lowest interest rate.
You can only fix your rate AFTER the property has transferred into your name. You can only fix for an agreed term, which is generally up to 24 months. This process can be managed directly with the bank that has your home loan.