Property ownership is becoming increasingly top of everyone's wish list and
the banks have become a lot more lenient in their lending policies by allowing
first-time and second-time buyers, providing their income can sustain the bond
repayments, to include all legal costs in their home loan application.
What are the costs?
When purchasing property, it is wise to remember that the purchase price is only
part of the cost that you will incur. Transfer duty applies on any price over
R500 000 and this is not forgetting that on top of the transfer costs there are
also the conveyancing attorney fees. Conveyancing costs are charged to put your
name on the title deed and will also include vat, deeds offices' fees, and small
miscellaneous costs. When a bond is applied for, the conveyancer will charge a
further fee plus vat to draw up the documents in favour of the bank. Over and
above that the bank will charge an assessment fee to value the property and a
once-off initiation fee.
All these costs can be added to your bond application, but the following
criteria will apply:
Minimum monthly income of R6000
Bond repayment must not exceed 30% of gross income
Age limit varies from bank to bank
Minimum loan amount of R100 000
Maximum loan amount varies from bank to bank and certain banks restrict
the maximum to R1m, but it may be more depending on the bank.
Stable employment
Clean credit record
No retail arrears
Exclusions
The are following are excluded from applying for 108% bonds:
Vacant land
Business and commercial loans
Loans in the names of legal entities i.e. CC, Trust or Company
Some banks exclude switches from other banks while some will actually
pay the bond cost to switch, providing the client goes directly to the bank.
Interest rate concessions on bond costs
This varies from bank to bank, but to give you an example, the bank will give a
discounted rate on the 100% and base rate on costs, so it is best to check with
the bank of your choice on how they work. Some banks will even allow you to opt
for a fixed rate - just keep in mind that it will be much higher than the base
rate at that point in time.
What about an access facility?
A question frequently asked by first-time buyers is "can I have an access
facility?" The answer is that this will only be an option when the risk to the
bank is reduced to less than 100% and there are two ways that this can happen:
The loan is reduced because all the costs are paid by you (you can
access the balance up to the 100% portion).
If the value of the property has increased significantly, all you need
to do is enquire at the bank you are dealing with and request to have your
property re-assessed.