Buying Advice

Click here if you are purchasing from outside of South Africa.

 

The Deposit
You usually need to put down a cash deposit of at least 10% of the purchase price. You can then apply for a home loan for the remainder of the purchase price.
If so, make sure your money is paid into the transferring attorney's "Trust" account.
Also ask to get the interest on the deposit money while it remains in the "Trust" account.

 

The Loan
The size of your home loan will depend on how much you can afford to pay each month. Normally, the repayments on your home loan should be no more than a quarter of your total monthly income - including that of your husband or wife. With installments of one quarter of your salary each month you could afford roughly 15 times your joint monthly salary. If you increase your installments to 30% of your monthly salary, the loan you could afford would increase to 18 times your salary.

 

Freehold
Freehold property means you have full ownership rights to the property.
In urban areas, proclaimed townships and certain private-land areas, you can buy freehold property. A freehold property can be registered into your name in the Deeds Office. This office keeps the official records of who owns which properties. The Title Deeds must be made out in your name to prove that you are the owner.
http://www.platinumplanet.co.za/Academy/HomeBuy.htm  - TOP Sectional Title
There is also another way to own property - Sectional Title. This applies to the separate units in a complex such as a block of flats, a townhouse or a cluster-housing complex.With Sectional Title, you own your unit and have the right to use shared areas.

 

"Voetstoots"
When you buy a property, you usually buy it "voetstoots, which means, "as it is". This "voetstoots" clause is stated in your Offer to Purchase or Sale Agreement.
If there are any faults in the home after the sale, it is too late. If you find the faults before you buy, you can ask the seller to fix them. If the seller agrees to fix the faults, this agreement must be written into the Offer to Purchase.
If you do not do this, the "voetstoots" clause applies.

Woman's Rights
You can own a home in your own name:
If you are married by Antenuptial Contract in terms of the accrual system;
Or if you a single woman, a widow or a divorcee.
You and your husband can own a home together if you are married in community of property.

Budgeting
Should I shop for a Loan before or after I find a place to buy?
It's a good idea to let an agent help you look for financing before you find a home. The agent is in constant contact with money lenders, and can act as an invaluable "clearing house" of information.
If you are actively house hunting, but have not found the right home yet, ask the lender to do a "pre-qualification application". This details your income, debts and assets.
Knowing how much money a lender will lend you (based on your income and credit rating) puts you in a good bargaining position.
Sellers faced with deciding between two buyers, one who is "pre-qualified" - may favour the offer of the buyer for whom getting a loan is almost a sure thing.

 

Budgeting for your new home:
Check your usual monthly budget before you apply for a home loan.
Remember that monthly installments on your loan are likely to be about 25% of your income if you take the maximum loan.
There are a number of costs to pay before you can move into your new home. You need to budget for the following "once-only" costs:

Regular Monthly Costs
There are also monthly cost involved in owning a home in addition to your normal monthly expenses such as food, clothing, transport, entertainment, school fees and hire purchase - such as:

 

Offers and Occupation
Your next step:
Now that you have taken the first step towards buying your own home, the next one is very easy.
Making an Offer:
When you have decided on the property you want to buy, you will fill in a document called the "Offer to Purchase". This document is also called an "Agreement of Sale". It states the terms and conditions under which you agree to buy the property.
It is a legal document, so you should complete it very carefully. Most good estate agents have a standard "Offer to Purchase" form.
But, if you have any doubts, ask an attorney to read the document through before you sign it, to make sure there are no hidden problems in it.
Estate agents' preprinted "Offer to Purchase" forms are quite easy for you to complete. Most of these forms include a clause that reads: "This offer is subject to the condition that the purchaser is able to obtain a mortgage bond for the sum of R____ from a financial institution within ____ days."
If the form does not include the clause, then you should add it yourself. That way, if your home loan is not granted, the offer to purchase can be cancelled.
Of course, you are free to add clauses in your "Offer to Purchase" to say that faults must be fixed before you move in. You can also add a list of movable items that the seller has agreed to include in the sale, such as the stove, light fittings, TV aerial, curtains, swimming pool equipment and so on.
When to take Occupation
In your Offer to Purchase, you will agree to take occupation of the property on a date that suits you and the seller. If the property has not been transferred into your name by that date, you will pay occupation rent (also called occupation interest) until transfer is completed. After that you will start your home loan repayments.
It is a good idea to set the date of occupation for a time at which you are certain that the transfer will be completed.

How much to offer?
You have found a home you like, in a neighbourhood you feel comfortable in. You know the sale price is open to negotiation. How much should you offer?
First ask yourself how much this home is worth to you. The same house may be much more valuable to one person or family than to another.
For example, a big garden might be worth a great deal to someone who enjoys growing things, but might actually reduce the value for someone without interest in, or time for, gardening.
Next, consider these questions:
• What is the asking price?
• How long has it been for sale?
• Has the price already been reduced?
• What are the owner's reasons for selling?
• Is the owner in a hurry to move?
• What is the existing bond?
• What were the sale prices of other neighbourhood homes, and how did they compare in size and condition?
Remember, only you can decide the price you're willing to pay for a home.

The Additional Sum
The capital amount of a bond is the actual amount which is lent by a creditor or bank, the Mortgagee to the borrower, the Mortgagor and which is secured by the registration of a mortgage bond over property.
A mortgage bond is a real right in favour of the mortgagee and in the event of the sale of the property in execution, the mortgagee will have a preferential claim from the proceeds of the sale for the capital amount of the bond.
The additional sum in a bond gives a mortgagee a further preferential claim for any amounts disbursed on behalf of the mortgagor for legal costs incurred in suing for the recovery of any sum of money under the bond, monies disbursed for rates and taxes levied in respect of the property mortgaged, payment of insurance premiums in respect of the property, etc.
In the event of the sale of the property in execution, the mortgagee will also have a preferential claim for these amounts which have actually been incurred but only up to the maximum amount of the additional sum referred to in the bond.
The additional amount is usually calculated in 20% of the capital amount of the bond. Stamp duty is not paid on the additional amount unless the amount is also available to secure future advances to the mortgagor.

The Transfer Process
In a nutshell, the process is as follows:
1. Finalise the Agreement of Sale with the Seller and/or the Estate Agent
2. The Seller nominates the transfer attorney
3. Apply for a loan from your selected bank
4. The bank’s valuation department will inspect and value the property
5. The conveyancing attorney is instructed by the purchaser to proceed with the transfer
6. The conveyancer will source the title deeds from the Seller
7. The conveyancer will apply for cancellation requirement of any existing mortgage on the property
8. The documents are prepared by the conveyancer
9. The Electrical Clearance Certificate in terms of the Deed of Sale is arranged by the Seller and/or his Agent.
10. The documents are signed by the buyer at the conveyancer’s office.
11. The documents are signed by the Seller
12. the pro-forma transfer costs and conveyancer’s fees are payable by the Buyer.
13. The financial guarantee is obtained from the Bank providing the mortgage
14. Where applicable, the conveyancer will arrange for the exemption of Transfer Fees.
15. A rates/levy clearance is obtained from the municipality by the conveyancer
16. The documents are logged at the Deeds Office
17. Registration takes place
18. The payment of sale proceeds
19. Commissions are paid
20. Relax and enjoy your new home!

The registration of a property transaction is handled by a specialist qualified legal practitioner know as a Conveyancer. It is customary for the Seller to appoint the Conveyancer to attend to the registration of transfer of a property sold, whilst the costs are for the account of the Purchaser, unless contractually otherwise agreed.
The Conveyancer prepares the required transfer documents, which after signature by both parties, is lodged together with the cancellation of any existing mortgage bonds and new mortgage bonds to be registered in the local Deeds Registry Office. The documents are subject to intense scrutiny and examination after which they are made available for registration.
On the date of registration of transfer, all existing mortgage bonds registered over the property are cancelled simultaneously with the registration of any new mortgage bonds in favour of the bank granting financial assistance to the Purchaser and the Purchaser is recorded as the new owner of the property. At this point the purchase price is paid to the Seller.
Upon transfer to the new owner, any liabilities in respect of the property incurred by the previous owner, remain with the previous owner and do not pass to the new owner, unless otherwise agreed to.
Occupation, Possession, Transfer and Occupational Interest
Occupation is the date of the physical occupation of the property.
Possession is generally deemed to be the date upon which the Purchaser assumes responsibility of the property.
Transfer refers to the actual date of registration in the Deeds Registry in favour of the Purchaser.
Occupational Interest is the rental payable by the party occupying the property belonging to another where the date of occupation and date of transfer differ.