Home Loan Advice and the NCA
Advice to the Seller
First of all, if you are going to be selling your property, you must inform your bank A.S.A.P., as they will charge you a 3-month penalty interest if you don’t ! (OBTAIN PROOF OF THIS, YOU MAY NEED IT).
At this stage a very important question must be asked, how is your relationship at the moment with S.A.R.S. ?
Do you owe them any tax returns ?
Are you registered for tax ? Do you owe them any money ?
If so, they will be keeping a watchful eye on your sale !
As they have to issue the transferring attorney a S.A.R.S. tax clearance certificate, to move forward with the sale.
Another very common problem is that people tend not to worry about their municipality commitments being their Rates, Water, Refuse. You realise that your bill is piling up but you think, “Just wait until I have some spare cash, then I will pay it, no problem”.
Unfortunately this never happens and when the home gets sold, this becomes quite an issue, especially as the Conveyancers require the cash in advance, to get the rates clearance from the municipality. If it has been left for a long time, the amount becomes excessive, especially with the monthly compound interest the municipality charges.
It is possible to borrow this cash through a money lending company, against the proceeds of your sale, however this short term bridging finance is not for free and they charge interest, but it’s better than holding up your sale and ultimately the proceeds thereof.
The other costs to you would be, you would have to supply a beetle and electrical compliance certificate +/- R800.00 + any repairs that you may require, are extra, to be taken from the sale proceeds.
The final cost to you, would be your bond cancellation fees on your home loan, which is billed according to the amount of bonds to have been registered over that particular property, but as a general thumb suck, at the time of compiling this, on one Bond only, you could safely say you would pay approximately R1 500.00 ( estimation ) to the banks attorney, also to be taken from the proceeds of the sale.
This is for calling up your title deeds from the archives, liaising with your attorney doing the transfer and eventually cancelling your bond, in the deeds office, on your behalf.
Advice to the Purchaser
The benefit of going to a mortgage originator is that the originator can take your application to all the major banks and negotiate on your behalf, the best possible interest rate in the market place, at no cost to you !
The banks are constantly changing their lending criteria for home loans, at the time of compiling this, the banks minimum requirements are, payment from the purchaser of a deposit of between 10% --20% plus you must also pay all your own transfer and bond costs.
One of the most important factors to remember when purchasing a Home is “Area, Area, Area,” you can always extend your home or renovate it, but you cannot move the home to another location !
Before you start to look for a home, it is advisable to get a pre-approved bond, in order for you to know how much you can purchase for, so you don’t waste your time looking in the wrong price range.
Another good idea is to get a credit check in advance, if you are not sure about your credit record in the past, because if you have an adverse credit record, you will not be getting a home loan quickly !
Once you have been through the above and you don’t have any property to sell, you will be in an ideal position to purchase a property and we wish you the best of luck !!
The National Credit Act
The new National Credit Act of South Africa came into affect on the 1st June 2007, just at the right time, to curb the South African public from applying for too much credit at the banks. (Otherwise we may have ended up, in a credit crunch situation like overseas) The new act now makes the banks legally responsible for checking the applicant’s full credit situation.
On bond application, clients are asked to declare their income as well as their expenses.
With this new act the banks, will have to be very careful about ensuring that the client has declared all their debt, for example, car payments, credit card payments, retail accounts, rental agreements, other home loans, etc..etc..
So prepare yourself well, before you speak to the bank !
What are the Objectives of the NCA ?
1. To prohibit reckless credit granting
2. To prohibit certain unfair credit and credit-marketing practices
3. To promote black economic empowerment and ownership within the consumer industry
4. For debt re-organisation in cases of incidental matters
5. To promote responsibility
HOME LOAN ADVICE AND THE N.C.A.
TIPS ON PREPARING YOUR HOME TO SELL
THE SELLING AND PURCHASING PROCESS
CONVEYANCING & DEEDS OFFICE PROCESS
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'the rite way to go!’
