Building your own home has the benefit of allowing you to develop the property of your dreams. It may also bring additional problems. Banks have developed a specific loan product, the building bond, to cater for constructing your own home. A building bond is essentially defined as a loan that allows for periodic payouts at certain key points during the building process. This differs from other forms of loans which are paid in full on transfer of the property. In addition to the normal documents required by the bank to approve a bond, there will be additional documents that are specific to a building bond. Perhaps the single most important aspect of a building bond is to understand the way in which the facility operates. The ultimate value of the property on completion is important but not the primary consideration that determines what draw downs will be allowed. At all times, the bank will "retain" an un-drawn balance that is equivalent to the banks' estimate of what it may cost to complete the project. The importance of this is that you or your builder must have sufficient working capital to bring the construction to the point where the bank will be prepared to allow a draw. If you are in any doubt, please discuss this aspect with your consultant or the bank.
Your search for a new home can be made much easier if you use the services of an estate agent. Agents make it their business to provide every service connected with your search for a home - from expert advice in the early stages, to careful monitoring of taking transfer of your home. The more closely you work with one agent, the better your needs become known and the more effectively they can help you, saving you time and possible trouble. All agents are bound by law to deal fairly and ethically with both the buyer and the seller. Because the seller typically mandates the agent, the agent is legally obliged to represent the seller's interests. This means you must decide what offer to make and what counter-offers to accept. Don't make or accept an offer that you are not completely comfortable with.
What are the benefits of using an estate agent?
The agent can help you to set up a plan of action through an analysis of your needs and finances, the current housing market and homes available in your price range. The agent personally conducts your search to find neighbourhoods and homes that fit your requirements. The agent can guide you through making an offer on a home and presenting it to the seller.
What is the role of the estate agent?
The estate agent is the link between the buyer and the seller. The agent will negotiate an agreement of sale acceptable to both parties. An offer to purchase is drafted by the estate agent. This must be signed by the agent, the buyer and the seller. Once signed it becomes a legal binding contract of sale. A copy of this document must be attached to the loan application form. For this service, the estate agent charges a fee or commission paid by the seller.
This will depend on what your contract says. Your deposit can be paid either to the estate agency or the conveyancers appointed to handle the transfer. They both have trust accounts where your money is protected. Please ensure you receive the appropriate receipts. Don't pay your deposit directly to the seller or to an estate agent, as opposed to the estate agency company.
2. Who gets the interest on the Deposit?
Unless otherwise agreed, the interest is paid to you after registration of transfer. On your written authority, both your estate agent and conveyancer can arrange for it to be invested in an interest-bearing account, and will act in your interests by placing it in the best short-term investment available.
3. To whom do I pay the Occupational Rental?
Your occupational rent goes to the estate agent or the conveyancer. They will usually pay it into the seller's bond account or directly to the seller, if he has paid off enough of his bond account. You could pay it directly into the seller's bond account if so agreed, but you may be required to provide proof of payment each month.
4. When will I have to sign the Transfer Documents?
This may only be a few weeks after the sale agreement is signed. Usually your conveyancer will wait until the bond is granted and he has received the cancellation figures for the seller's existing bond. Only then can the guarantee authority forms be completed and signed. You can phone the conveyancer for an update at any time
5. How long will the transfer take to register?
This depends on the circumstances and due dates for the bond grant, and on the guarantees stipulated in the deed of sale. The average for most sales is about three months from the date of sale. When there are no complications, registration can be effected within two months. In cases where there are complications, registration can be delayed. In such cases, you will need to stay in touch with your conveyancer.
6. What will my transfer and bond costs be?
Your estate agent and attorney should be able to answer this question based on a schedule of transfer and bond costs. The actual transfer fees depend on the purchase price of the property. Bond costs depend on the total loan registered - and whether you are buying in your own name or in a trust, close corporation or company. Our fee calculator will give you a clear indication of the costs involved.
7. When must my transfer costs be paid?
This usually happens a few weeks after the sale, when you sign your documents. Your conveyancer will require payment, since he has to pay the transfer duty - the major charge on most transfers - in advance, as well as the rates or levies due to obtain a clearance certificate. Don't delay making a payment - it will unnecessarily delay the transfer.
8. Who will register the transfer bonds?
The bank will have a local panel of conveyancers for bonds, and one of these will be instructed to register your bond. If the transfer conveyancer is one of those on the panel, he will probably do the bond registration as well. The bond costs will be the same, though your transfer may go through faster if the same conveyancer does both.
9. Who will contact me on registration?
Your conveyancer's secretary should contact you on registration to advise you. You will also be given a final statement of the account. Your estate agent may also phone you to confirm registration. The bank will send you a letter advising you of the registration of your bond, and the date when your first instalment is payable.
10. Where will I get the keys to the property?
It is best to make an arrangement with your estate agent to pick up the keys from them on the agreed day of occupation.
The interest rate the bank charges is determined by a number of factors. The interest rate will reflect the risk the bank perceives with the transaction. The amount of the loan, your personal financial record, your income and repayment, and perhaps most importantly, the deposit you have available, will determine the rate engaged. Given the competitive nature of the home loan market, significant differences in rate are unusual but if you approach only a single bank, you may not receive your best rate. While the rate of interest is an important consideration, one cannot lose sight of other considerations when deciding on where to place your home loan business. The savings possible through use of an access facility could easily outweigh a small rate premium.
Completing an application through us, is just one of the many things you need to do in order to obtain home financing. You will also need to provide a variety of documentation to help your lender. The information required will vary depending on the lender you choose, your loan option and your personal financial situation. Various documents are generally required when applying for a new home loan. For a fast and easy loan process, have these items available when you are ready to complete your application.
The documents normally required can be determined from the following matrix:
Document
Salary Earners (each party)
CC’s / Trusts / Companies
Sole Proprietors
Commission / Overtime earners
Self employed by own company / CC
Copy of offer to purchase
Yes
Yes
Yes
Yes
Yes
Copy of identity document
Yes
Yes
Yes
Yes
Yes
Latest Salary slip
Yes
Yes
3 consecutive months salary slips
Yes
3 months bank statements evidencing deposit of income / commission / maintenance etc
Yes
Yes
Yes
Yes
Application
Yes
Yes
Yes
Yes
Yes
Commission statement
Yes
Statutory documentation (trust deed, company or CC registration)
Yes
Financial statements of business, CC or company
Yes
Yes
Yes
Letter from auditor / accounting officer confirming income
Yes
Yes
Personal statement of assets and liabilities
Yes
Yes
Yes
Yes
Yes
Other Aspects:
Copies of bank statements must validate earning as disclosed on application.
Where maintenance or rentals form part of income, bank statements should be supported by a copy of the divorce decree or lease agreement as applicable.
Rehabilitation insolvents need to have been rehabilitated for more than 12 months and provide a copy of the rehabilitation order.
If an employee guarantee is provided:If a state employee: form z572/3 is required. Other employees: letter of intent from company
Sectional title:In an established complex, a copy of the latest audited sheet of the body corporate. For a new complex not yet approved by the bank, a sectional title plan may be required.
Building loans:Special additional documents will be required. Copy of contractors NHBRC (not applicable for further advances) Copy of provisional / approved plans Copy of detailed tender / quotation Signed minimum specifications and schedule of finishes Signed builders waiver of lien
SA Citizens working overseas:Copy of valid employment contract (minimum duration 12 months) Income and expenditure in currency that monthly income is received
NB: While different banks may not require all the above documents in specific cases, it is always advisable to check on any specific requirements before relaxing any above criteria.
