Download - Home Buyers Guide Standard Bank
Home owner’s manual
3
Index
Chapter 1 – Introduction 5
Chapter 2 – Housing finance 5
• Keystepstobuyingahome 5
• Roleplayersinthehomebuyingprocess 8
• Whereareyouintheprocess? 9
Chapter 3 – Affordability and budgeting 10
• Affordabilityisveryimportant 10
• Yourbudget 10
• Incomeandexpenditureguide 10
• Howtoimproveyouraffordability 11
Chapter 4 – Costs and expenses 12
• Thecostswhenyoutakeahomeloanfromus 12
• Theexpensesyouwillhaveasahomeowner 13
Chapter 5 – Things to know about a home loan 15
• General 15
• Rightsandobligations 17
• 10questionstoaskyourattorney 18
Chapter 6 – Contracts 20
• Whatisacontract? 20
• Differentcontractsinthehome-buyingprocess 20
• Breachofcontract 20
Chapter 7 – Wills 21
• Makingawill 21
Chapter 8 – Building a house 23
Chapter 9 – Sectional title 24
• Wealsogranthomeloansforsectionaltitledevelopments 24
Chapter 10 – The National Credit Act (NCA) 26
• WhatistheNCA? 26
• FactsabouttheNCA 26
Chapter 11 – Useful contact numbers 28
Chapter 12 – Income and expenditure guide 28
Chapter 1 – IntroductionWelcometotheworldofhomeownership!
Thankyoufortrustingustobeyourpartnerinthe
bigdecisionofbecomingahomeowner.Thereare
manythingstoconsiderandthismanualwillguide
youthroughthem.Ahomeisprobablyoneofthe
mostexpensivethingsthatyouwilleverbuyand
youneedtounderstandwhatthismeansforyou.
Owningpropertymeansyouhaveanassetyouwant
togrowinvalue.Itistherefore,essentialtolook
afteryourpropertytokeepyourinvestmentsafe.
Yourproperty(theasset)canalsohelpyoutomake
money:
• Propertyvaluesgenerallygrowovertime,which
meansyoumaysellyourpropertyformorethan
youpaidforitandusethisprofittobuyanother
one.Butthat’snotall…
• Youcanaddroomsormakeimprovementsto
yourhomewhichwillnotonlymakeitmore
comfortableforyouandyourfamilybutwillalso
addtoitsvalue.Youneedtomakesurethatthe
renovationsareprofessionallydoneortheycould
haveanegativeeffectonthevalueofyour
property.
• Youcanaddroomsthatyoucanrentouttomake
someextramoney.
• Youcanaddorconvertroomstorunyour
businessfromhome.
Owningahomemeansthatyouwillbetakingon
newfinancialresponsibilities.Ahousecanrangein
pricefromafewhundredthousandtomillionsof
rands.Mostpeopledonothaveenoughcashtopay
forthehousetheywanttobuyandhavetoborrow
themoney.
Housingfinancemakesitpossibleforyoutobuy
ahouse.Ifyoubuyahouseandusefinance,you
havetheresponsibilityofrepayingalargedebt
whichmaybeoveralongperiod.
Therearealsootherfinancialresponsibilitiesthat
comewithhomeownership:
• Youwillhavetopayforservicessuchaslights
andwater.
• Youwillhavemaintenanceexpensestokeepthe
houseingoodcondition,forexample,painting.
• Youwillhavetopayinsurancetocoveryour
houseagainstfireorotherdamage.
• Youwillhavetopayratesandtaxes.
• Inthecaseofsectionaltitle,youwillhavetopay
levies.
Thishandbookgivesyousomebasicinformation
abouthomeownershipandhomeloanstohelpyou
tounderstandthembetter.
Pleasedonothesitatetocontactyournearest
branchorourcustomercontactcentreon
0860123001formoreinformation.
Enjoyyourhome.
Chapter 2 – Housing finance
Thefollowingstepsinthehome-buyingprocessare
importanttonote.Asyouhaveanexistinghome
loanaccountwithus,youwouldhavebeenthrough
thefirstfewstepsmentionedbelow.Evenso,you
cansharethisinformationwithfriendsandfamily
whoareconsideringbuyingahomeandyoucan
usethesamestepswhenyouwanttobuyanew
home.
Taketimetoreadthroughallthesecarefullysothat
youarepreparedeverystepoftheway.
Key steps to buying a home
Step 1: Budgeting and affordability
Thefirststepistoworkouthowmuchyoucan
affordtopayeverymonth.Thisisnotonlyonyour
monthlyhomeloaninstalment,butalsoincludes
insurance(bothforthebuildingandthecontents
ofyourhome),assurance(alifepolicytocover
theloanshouldanythinghappentoyou),rates
andtaxes,levies,waterandlightsaswellasyour
livingexpenses.Youshouldtakeallyourdebt
commitmentsintoaccounttoensurethatyoudo
notspendmorethanyoucanafford.
Generally,spendingabout30%ofyourincomeona
homeloanrepaymentisreasonablyaffordable.Itis
alsoagoodideatoapproachusforapledgebefore
yougohousehunting.Thatwayyouknowthe
homeloanamountyouqualifyfor.SeeChapter3–
Affordabilityandbudgetingformoreinformation.
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Step 2: House hunting
Onceyouknowhowmuchyoucanafford,you
needtodecidewhatkindofhousesuitsyourneeds
andyourpocket.Youcanbuildorbuyafreehold
property(ahouseonasinglestand),acluster
homeoryoucanbuyasectionaltitleunitina
complex.SeeChapter9formoreinformationabout
sectionaltitleandChapter8forinformationabout
buildingahome.
Step 3: Make an Offer to Purchase
Ifyouhavedecidedonthepropertyyouwouldlike
tobuy,youwillneedtofillinanOffertoPurchase.
Thisdocumentissometimesalsoknownasan
AgreementofSaleorDeedofSale.Basically,itis
awrittenagreementstatingthatyouwanttobuy
thepropertyandthetermsandconditionsunder
whichyouagreetobuyit.Ifthebuyingpriceofthe
propertyisbelowR250000,afive-daycoolingoff
periodapplies.Thismeansthatyouhavefivedays
aftersigningtheOffertoPurchasetowithdraw
youroffer.Afterthefivedays,youwillbelegally
boundtotheagreementandyoumayfindyourself
introubleifyouthenwanttocancelthedeal.
FormoreinformationaboutanOffertoPurchase
refertoChapter6–ContractsandChapter5–
Thingstoknowabouthomeloansunderrightsand
obligations.
Step 4: Seller accepts your offer
TheOffertoPurchasehastobenegotiated.
Youshouldnotewhichfixturesandfittingsformpart
ofthesale.Allthepermanentfixturesandfittings
suchaslightfittings,carpets,tiles,curtainrailsand
pelmets,andbuilt-incupboardsareincludedin
thesaleunlessyouandtheselleragreeotherwise.
Anymovableitemsincludedinthesalemustbe
negotiatedbetweenyouandtheseller.Itisalso
importanttounderstandtheconditionsunderwhich
youwilloccupytheproperty.Inparticular,makesure
thattheoccupantofthepropertyiswillingtoleave
thepremisesonthedateagreedtointheOfferto
Purchase.Onceyouhavenegotiatedtheoffer,the
sellerwillaccepttheOffertoPurchaseandyouareon
yourwaytobecomingahomeowner.SeeChapters5
and6formoreinformation.
Step 5: Apply for a home loan
Younowneedtofillinahomeloanapplicationform
andgiveusallyourpersonalinformationandthe
requiredsupportingdocuments.
Thedocumentsweneedare:
• Proofofincome
• CertifiedcopyofSouthAfricanidentity
documentorpassport
• Yourspouseorpartner’sidentityorpassport
number,ifyouaremarriedincommunityof
propertyorifyouaredoingajointapplication
• Proofofyourcurrentstreetaddress(municipalor
Telkomaccount,orvalidTVlicence)
• Yourincometaxreferencenumber(ifapplicable).
Step 6: Requirements will be confirmed
Wecanstartprocessingyourhomeloanapplication
assoonaswehaveyourhomeloanapplication,
thesignedOffertoPurchaseandothersupporting
documents.Thisincludesmakingsurethatyoucan
affordtheloanamountyouareapplyingforand
creditcheckstoseehowyouhavebeenconducting
yourotheraccounts.
Step 7: A property valuation is done
Thepropertyisthesecurityforyourloan.Thismeans
thatwehavetherighttosellyourhometorecover
theoutstandingamountsowingtousifyoudo
notpayyourinstalmentseverymonth.Wedoa
propertyvaluationtocheckwhetherthepresent
marketvalueofthepropertycoverstheamount
thatyouwanttoborrow.
Step 8: A decision is made
Afterconsideringyourincome,affordability,credit
standingandpropertyassessment,wewillmakea
finaldecisiononyourloanapplication.
Step 9: Quotation letter
Ifyourhomeloanapplicationisapproved,wewill
sendyouaquotationletter.Theletterwillinclude
importantinformationaboutthehomeloanaswell
asanyspecialconditionsthatwillapplytotheloan.
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Step 10: Registration attorney
instructed to register the bond
Wewillappointaregistrationattorneytoattend
totheregistrationofyourbond.Thisattorneywill
makesurethatthepropertyistransferredintoyour
nameandthatthemortgagebondisregistered.
Step 11: You sign the necessary documents at
the attorneys’ offices and pay the relevant costs
Youwillberequestedtosignallthenecessary
documentsattheregisteringandtransferring
attorneys’offices.Thetransferandbondregistration
feesmustbepaidinfullatthedifferentattorneys
beforethebondcanberegisteredinyourname
attheDeedsOffice.SeeChapter4–Costsand
expensesforthefeesthatwillapply.
Note:thetransferringattorneyistheseller’s
attorneyandtheymustmakesurethatthe
propertyistransferredoutoftheseller’sname.
AlsoseeChapter5–Thingstoknowaboutahome,
10thingstoaskyourattorney.
Step 12: Documents sent to Deeds Office for
registration in your name
Oncealldocumentsareinorderandallfeeshave
beenpaidinfull,theattorneyswillsubmitthe
documentstotheDeedsOffice.Thisprocessis
referredtoas“lodgement”.
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Step 13: Home loan registered in your name at
Deeds Office by registering attorney
WhentheDeedsOfficehascheckedallthe
documents,thetransactionwillberegistered.
Thisnormallytakesabout10workingdaysfrom
whenthedocumentswerelodgedwiththe
DeedsOffice.
Theprocessondateofregistrationisasfollows:
• Propertyistransferredfromthesellertoyou
(thebuyer).
• Yourmortgagebondisregistered.
• Seller’sbondiscancelled.
• Fundsarepaidtorelevantparties.
• Youareadvisedthatthebondhasbeen
registered.
• Theamountyouowewillbeshownonyour
homeloanaccount.
Note:Becauseoftheinvolvementofotherparties
andtransactions,itcouldtakeuptothreemonths
afteryourloanisapprovedforyourbondto
beregistered.
Step 14: Confirmation of your instalments
Wewillsendyoualettertoconfirmyourbondhas
beenregisteredandwhatyourinstalmentswill
be.Wewillsendyouahomeloanstatementtwice
ayearshowingtheoutstandingbalanceonyour
homeloanaccount.Ifyoudonotgetastatement
itdoesnotmeanthatyouraccountisfullypaidup.
Itremainsyourresponsibilitytomakesurethatyou
arealwaysinformedofthestatusofyouraccount.
It is also your responsibility to make sure that
we have up-to-date contact details (telephone
numbers and postal address) to be able to
communicate with you. If your details change
at any time, it is very important that you give us
your new details.
Step 15: Your first monthly instalment
Yourfirstpaymentisdue30daysaftertheproperty
isregisteredinyourname.Itiscompulsorytoset
upadebitorderorsalarydeductiontomakesure
yourhomeloaninstalmentispaidinfullandon
timeeverymonth.
Forbuildingloans:yourfirstinstalmentisdue
within30daysafter90%oftheloanhasbeenpaid
oronoccupation.
Step 16: Attorney sends title deed and mortgage
bond documents to us for safekeeping
Ifyouhaveanyquestions,pleasevisityournearest
branchorcallourcustomercontactcentreon
0860123001.
Role players in the home buying process
Estate agents
• Estateagentsparticipateinthenegotiationsof
thesaleagreementforthepropertyforbothyou
(thebuyer)andtheseller.
• Youshouldmakesurethattheestateagentyou
aredealingwithisregisteredwithEstateAgency
AffairsBoard(EAAB).
• TheEAABwassetupbygovernmenttoprotect
peoplebuyingorsellingahousethroughan
estateagent.
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Developers
• Developerscanbeanindividualorcompany
thatbuysapieceoflandanddevelopsitintoa
housingcomplex.
• Thehousingcomplexcaneitherbefreestanding
orsectionaltitle.
The seller
• Isthepersonorentitythatisthelegalregistered
ownerofthepropertyandwantstosellit.
The buyer
• Isthepersonwhoisbuyingtheproperty.
The occupant
• Isthepersonlivingontheproperty.Thisisnot
necessarilytheselleroftheproperty.
Your bank
• Weassistyouwiththeloanapplicationprocess
andthenlendmoneytoyoutopaytheseller.
• Youcanapplyforahomeloanthrougha
mortgageoriginatorwhoisapersonwhocan
alsoassistyouwithgettinghomeloanfinance.
The seller’s bank
• Theseller’sbankensuresthatanyloantheseller
mighthaveonthepropertyispaidinfullbefore
itistransferredintoyourname.
Where are you in the process?
Youcanusethediagrambelowtohelpyoutotrack
whereyouareintheprocess.
Shouldyouhaveanyquestionsatanystageduring
theprocess,youcancallourCustomerContact
Centreon0860123001.
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Occupation date
(…../…../…../)
Application
(…../…../…../)
Property assessment
(…../…../…../)
Bond grant
(…../…../…../)
Pay fees at attorneys
and sign documents
Bond registration
(…../…../…../)
Loan payout
(…../…../…../)
Commence instalments
(…../…../…../)
Chapter 3 – Affordability and budgeting
Affordability is very important
Withhomeownershipcomemanyresponsibilities.
Oneoftheseiskeepingtoyourfinancial
commitments.Ifyoutakeoutanyloans,youmust
besurethatyouwillbeabletopaythemback.
Ask yourself these questions:
HowmuchsparemoneydoIhaveattheendof
everymonth?
HaveIsavedmoneyforunexpectedexpenses?
AmIspendingmoremoneythanIearn?
AmIlivingoncredit?
DoIhaveanyaccountsthatareoverdue?
Itisveryseriousifyoudonotpayyourhomeloan
instalments.Youcanloseyourhome,yourdeposit
andallthatyouhavepaidonyourloan.Youmust
thinkcarefullyaboutyourfinancesbeforeandafter
youhavetakenoutahomeloan.
• Beforeyoudecidetotakeoutahomeloanyou
mustworkoutyourincomeandexpenditure.
Youmustknowwhatitwillcostyoueachmonth
toliveinyourhome.Theseexpenseswill
includeyourhomeloanrepayments,repairsand
maintenancetotheproperty,municipalservices
suchaswaterandelectricity,levies,andrates
andtaxesonyourproperty.
Theseexpensesareinadditiontoyournormal
livingexpenses.SeeChapter4–Costsand
expensesfordetailsofthedifferentcostsand
expensesrelatedtohomeownership.
• Onceyouhaveyourhomeloanyouwillneedto
consideryourfinancialpositionbeforeyoutake
onanyadditionalexpenses.Again,youshould
bearinmindthatyourhomeloaninstalment
couldincreaseatanytimedependingon
changesintheinterestrate.
Your budget
Itisalwaysagoodideatodrawupabudgetto
helpyoutomanageyourfinances.Abudgetwill
helpyoutounderstandhowmuchmoneyyou
haveavailablebycomparingyourincomewith
yourexpenses.
Income and expenditure guide
Theincomeandexpenditureguidehelpsyouto
understandyourmonthlyincomeandexpenditure
andhowitcontributestoyourapplication.
Tofillinyourincomeandexpenditurestatement
youneedindividualgrossincomeandexpenses.
Ifyourexpensesareshared(forexample,youare
married)thenonlyonepartnerneedstorecord
theirexpenses.Makesurethatyouarerealisticand
honestwithyourselfwhenyoufillinyourincome
andexpenditurestatement.Bearinmindincreases
intheinterestrateandcostofliving.
Please see the back of this handbook for an
income and expenditure guide that you can use
for ongoing budgeting.
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How to improve your affordability
Whenapplyingforahomeloan,thereareanumber
ofwaysinwhichyoucanimproveyouraffordability.
1. Your employer may have a housing assistance
scheme
Manyemployersassisttheirstaffwithbuyinga
home.Thisisusuallyamonthlyhousingsubsidy
orallowance.Thissubsidyorallowancehelpsyou
toaffordyourhomeloaninstalments.Checkwith
youremployerifthereisanassistanceschemein
place.Mostbankswillonlyallowyoutousepartof
youremployerhousingsubsidywhenworkingout
youraffordability.Thisisagoodthing,becauseif
youloseorchangeyourjob,youwillstillbeableto
affordyourinstalments.
2. Use your savings
Useyoursavingstoputdownasbigadepositas
possible.Thiswayyouwillneedtoborrowless
moneywhichmeansyoupaylessinterestandyour
monthlyinstalmentwillbemoreaffordable.
3. Government subsidy
Ifyouqualify,thegovernmentmaygrantyoua
housingsubsidy.Thissubsidyisaonce-offlump
sumpaymenttowardsthecostofyourhouse.You
donothavetorepaythemoney,butitmustbe
usedforhousingandyoumaynotsellthehouse
withinaspecifiedperiodwithoutpermissionfrom
theProvincialHousingDepartment.Thesubsidywill
bepaiddirectlytousandcanreducetheamount
youneedtoborrow.
Youmayqualifyforagovernmentsubsidyif:
• YouareaSouthAfricancitizenorapermanent
resident.
• Youareafirst-timehomebuyer.
• Youareatleast21yearsold.
• Youaremarried(civilandcustomary)orliving
withalong-termpartner.
• Yourjointgrossmonthlyincomeisnotmorethan
R7000amonth.
• Youaresinglewithfinancialdependants.
• Youmusthaveacashdeposit.
Ifyouqualifyforagovernmentsubsidy,depending
onthetypeofsubsidyyouget,wemaybeableto
applyforitonyourbehalf.Thesubsidywillnotbe
approvedifwedeclineyourhomeloanapplication
orthehomeisnotregisteredinyourname.
Speaktoyourhomeloanconsultantformore
informationonsubsidies.
4. Settling outstanding debts
SincetheNationalCreditAct(NCA)wasintroduced
inJune2007,youhavetodisclose(mention)all
yourdebttouswhenyouapplyforanytypeof
loan.Ifyoupayoutstandingdebtsbeforeyouapply
foryourhomeloanyourchancesofqualifyingfor
theloanamountyouwantwillimprove.
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Chapter 4 – Costs and expenses
The costs when you take a home loan from us
1. The deposit
Wehavetherighttoaskyoutopayadeposit.
Thebiggerthedeposityoucanputdown,the
smallerthehomeloanyouwillhavetotakeand
thelessinterestyouwillhavetopay.
2. Initiation fee
Thisisthechargetopreparethedocuments
andprocessyourloanapplication.Wenotethe
initiationfeeinyourquotationletterandalso
discussitwithyouafteryourhomeloanhas
beenapproved.
3. Service fee
Wechargeamonthlyservicefeeonyourhome
loan.Wenotetheservicefeeinyourquotation
letterandalsobediscussitwithyouafteryour
homeloanhasbeenapproved.
4. Transfer fees
Alawyerpreparesthedocumenttotransferthe
titledeedforthepropertyfromtheseller’sname
toyourname.Asthebuyeroftheproperty,you
paythetransferfeesupfront.Thesearecalculated
onthebuyingprice.Notransferdutyispayable
forloansuptoR500000butthetransferring
attorney’sfeewillstillapply.Thetransferring
attorneywilladviseyouoftheamountthatyou
willneedtopay.Thesefeesmustbepaidbefore
registrationormaybeincludedinthehomeloan
amount.Yourquotationletterwillshowwhether
thefeeswillbeincludedinyourloanamount.
• Youdonotneedtopaytransferfeesifyou
arebuyingapropertyinanewdevelopment
(off-plan)orifyouareapplyingforaloanto
buildanewhouse.
5. Bond registration fees
Ourlawyer,calledaconveyancer,willalsoprepare
thebondregistrationdocumentssothatthebond
isregisteredinyourname.Theywillsendthese
documentstotheDeedsOfficewhereownership
detailsofeverysinglepropertyinthatareaisfiled.
Thechargeforthiscalledabondregistrationfee.
You(thebuyer)areresponsibleforbond
registrationfeesbeforeregistrationorthey
maybeincludedinthehomeloanamount.Your
quotationletterwillshowwhetherthefeeswill
beincludedintheloanamount.
6. Home-owner’s insurance
Home-owner’sinsurancecoversdamagetothe
structureofyourhouse.Theinsuranceprotects
youandusagainstanylossesifyourhouse
isdamagedordestroyedanditistherefore
compulsory.Forexample,ifyourhousecatches
fireorisdamagedbyfloods,thisinsurancehelps
topayfortherepairs.Itdoesnotcoverdamage
tothehousecausedbylackofmaintenanceor
thefurnitureinsidethehouse.
Youcanusetheinsurancecoveravailablefrom
usoryoucangotoaninsurancecompanyofyour
choice.Thisappliestofree-standingproperties.
Ifyouarebuyingasectionaltitleproperty,the
bodycorporatewillarrangethiscoverthrough
aninsurancecompanyofitschoice.
Pleaserefertoyourpolicytounderstandwhat
iscovered.Ifyoutakeapolicyfromus,the
monthlypremiumwillbeincludedinyourmonthly
debitorder.
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7. Life assurance
Youneedtoconsiderwhatwillhappentoyour
familyifyoudieorbecomedisabled.
Itisimportanttohaveadequatelifecovertosettle
yourhomeloanifsomethingunexpectedhappens.
AlsoseeChapter7–Makingawill.Rememberto
alwayscheckyourpolicydocumentscarefullytosee
whatyouarecoveredfor.
Thepolicycancoverthefollowing:
• Death.
• Disability.
• Retrenchment.
Ifyoutakeapolicyfromus,weincludethe
premiuminyourmonthlydebitorder.
The expenses you will have as a home owner
1. Monthly instalments
Assoonasthepropertyandhomeloanis
registeredinyourname,youmuststartmaking
repayments,evenifyouhavenotmovedinto
yourhouse.Afterthat,youmustpayyourloan
instalmenteverymonthforthedurationofthe
agreedloanperiod.
Yourmonthlyinstalmentincludesaportionto
repaytheamountthatyouhaveborrowedanda
portiontopaytheinterestontheloanamount.
Werecommendthatyoupayyourhomeloan
instalmentbydebitordereverymonth.
Ifyouhavearrangedtomoveintoyourhouse
beforethebondisregisteredinyourname,you
willhavetopayoccupationalrenttotheowner
ofthehouse.
Itisimportanttoknowthatyourmonthly
instalmentwillincreaseanddecreasedepending
ontheprimeinterestrate.Pleasereferto
Chapter5formoreinformationonthis.
2. Electricity
Youwillhavetopayadeposittohaveelectricity
connectedtoyourhome.Thenyouwillhave
topayfortheelectricityyouuseeverymonth.
Dependingonthesysteminthearea,youcan
useaprepaidcardsystemoryoucanbebilled
monthlyfortheamountofelectricityyouuse.
Thecostforelectricitycandifferfrommonth
tomonth.Youmustpaytheserviceprovider
directlyfortheelectricityyouuse.
3. Water
Youwillneedtopayadeposittohavewater
connectedtoyourhome.Dependingonthe
systeminthearea,youcanalsouseaprepaid
systemoryoucanbebilledmonthlyforthe
amountofwateryouuse.Yourlocalmunicipality
orotherserviceproviderwillsendyouamonthly
accountforthewateryouusedduringtheprevious
month.Youmustpaytheserviceproviderdirectly
forthewateryouuse.
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4. Municipal rates and taxes
Yourlocalmunicipalitywillsendyouanaccount
forratesandtaxesandyoumustpaythem
directly.Thisamountusuallystaysthesamefor
ayear.Thelocalmunicipalityusesthemoney
itreceivesfromratesandtaxestoprovide
seweragefacilities,repairandbuildroads,put
upstreetlightsandcollectrefuse.Notethatthe
localauthoritymayattachyourpropertyandsell
itifyoudonotpayyourrates
andtaxes.
5. Maintenance and repairs
Asahomeowner,youareresponsibleforthe
maintenanceofyourproperty.Itisbestto
attendtosmallrepairsandmaintenancework
onaregularbasis,andnotleavethemuntil
theybecomebigandexpensivejobs.Thisway
youkeepyourhouseingoodconditionandits
valueismaintained.Makesureyouincludesome
moneyinyourbudgetforthis.
6. Home improvements
Youcanincreasethevalueofyourpropertyif
youbuildanextensiontoyourhouseoradd
anotherroom.Ifyoumakeotherimprovements,
forexample,layfloortiles,thiscanincreasethe
valueofyourproperty.Theseextensionsand
improvementsmustmeetstandardrequirements.
Poorworkmanshipandpoorqualityofmaterials
usedwillnotincreasethevalueofyourproperty–
theycanevenreduceitsvalue.
7. Levies
Ifyouhaveboughtasectionaltitlepropertylike
aflatortownhouse,therearecostsforrunning
thecomplex,whichyouwillhavetocontributeto
everymonth.Thesecostsinclude:
• Rates
• Taxes
• Insurancepremiums
• Repairsandmaintenanceofthecommon
property,suchasthegardenandthebuildings
• Wagesandsalariesofcleanersandotherstaff
• Waterandelectricityusedonthecommon
property.
Chapter 5 – Things to know about a home loan
General
What is a home loan?
Whenyoubuyahouse,youpayapurchaseprice.
Thisisthepriceyouandtheselleragreeto.Ifyou
donothavethecashtopaythefullpurchaseprice,
youcanapplytoustoborrowmoney.Themoney
youborrowtobuyahouseiscalledahomeloanor
amortgagebond.
Ifyouqualify,wewillgiveyouahomeloan.
Youmayneedtopayadeposit.Wewillthenlend
youtheremainderofthepurchasepriceofthe
houseyouwanttobuy.Thisamountiscalledthe
capitalorloanamount.
Whenyoubuyaproperty,theTitleDeedisthe
legaldocumentthatstatesthatyouownthe
property.Assecurityforthehomeloanwegrant
you,amortgagebondisregistered.Amortgage
bondisthelegaldocumentregisteredwiththe
DeedsOfficeagainsttheTitleDeed,toindicate
thatyouhavealoancommitmenttous.
Themortgagebondwillberegisteredagainstthe
TitleDeeduntilyourhomeloanispaidoffinfull.
Althoughthereisamortgagebondregisteredin
ourfavourtheTitleDeedisinyourname.
Youthereforeownthepropertyandhaveownership
responsibilitiessuchasmaintainingtheproperty,
payingratesandtaxesandrepayingyourhome
loan.Ifyoudonotwantthepropertyitisyour
responsibilitytosellit.Wedonotownyourproperty;
wemerelyhavearighttoitifyoudonotrepayyour
homeloan.
How long do I have to pay off my loan?
Yourhomeloanmustberepaidtouswithina
certainperiod.Thisiscalledtherepaymentperiod
orloanterm.Whatyoucanaffordtorepayevery
monthwilldeterminetherepaymentperiodofyour
loan.Youragewillalsobetakenintoconsideration.
Therepaymentperiodisusually20years,butitcan
gouptoamaximumof30yearsincertaincases.
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Can I pay my loan off in a shorter time?
Yes,ifyoucanpayyourloaninashortertime,
youwillsavealotofmoney.
The savings are great
Itisalsoagoodideatomakeextralumpsumor
severalextramonthlypayments.Becauseinterest
ischargedonthedailybalanceanyamountyou
depositintoyouraccountwillreducetheamount
ofinterestyoupayontheoutstandingbalance
eachmonth.
Remember:Nomatterhowmuchmoreyoupay
eachmonthorhowoftenyoumakeadeposit,
youmustpaytheminimuminstalmentbythedue
dateasshowninyourloanagreement.
How do I pay my monthly home loan instalment?
Theloanispaidoffinmonthlypaymentscalled
instalments.Thesemustbepaidonorbeforethe
duedateeverymonth.
Youcanpayyourmonthlyhomeloaninstalmentin
oneofthefollowingways:
• Debitorder–thisgivesuspermissionto
withdrawyourmonthlyhomeloaninstalment
fromyoursavingsorcurrentaccount.
• Salarydeduction–youcanaskyouremployer
todeductyourhomeloaninstalmentfromyour
salaryeachmonth.Youremployerthensends
ustheinstalmentamountandyourhomeloan
accountiscredited.Thisisalsocalledapayroll
deduction.Itisyourresponsibilitytoletyour
employerknowifyourinstalmentchangesso
thatyourhomeloandoesnotgointoarrearsdue
toincorrectpaymentsbeingmadetous.
Tomakepayingyourinstalmentseasier,ontime
andforthecorrectamounteverymonth,itis
compulsorythatyousignadebitorderorsalary
deduction.Alwaysmakesurethatthereisenough
moneyinyourtransactionaccountsothatthedebit
orderisnotreturnedbecausetherearenotenough
fundsintheaccount.Askustoarrangethatyour
debitorderorsalarydeductionisprocessedon
thedaythatyougetpaid.Thatwayyouwillnotbe
“tempted”tospendsomeofthemoneythatyou
needforyourhomeloaninstalment.
16
Whereyouhavetakeninsurancepolicieswhich
applytoyourhomeloan,themonthlypremiumswill
beincludedinyourmonthlydebitorder.
Note:Ifyouarerentingouttheproperty,andthe
amountofrentyougetislessthantheinstalment,
youwillhaveto“makeup”thedifference.Youare
responsibleformakingsurethatyoupaythefull
instalmentduebytheduedateotherwiseyour
homeloanaccountwillbeinarrears.
Will my instalment change when the interest
rate increases or decreases?
Yourhomeloaninstalmentwillchangeasthe
interestratechanges.Whentheinterestrategoes
up,yourmonthlyinstalmentwillgoup.Whenthe
interestrategoesdown,yourmonthlyinstalment
willgodown.Interestratechangesareannounced
inthemediaandthenewinstalmentswillbecome
payablethenexttimeapaymentisdue.
Wewillsendyoualetterwhentheinterest
ratechangesandletyouknowwhatyournew
instalmentwillbe.Ifyoupayyourhomeloanby
debitorder,thecorrectinstalmentwillautomatically
bedeductedthenexttimeapaymentisdue.
Does the capital amount get less over the
loan period?
Whenyoupayyourmonthlyhomeloaninstalment,
yourpaymentfirstlypaystheinterestforthat
month.Secondly,itpaysyourinsurancepremiums
andservicefee.Andlastly,itpaysthecapital(loan)
amount.Thecapitalamountthenbecomesalittle
less.Thenextmonth’sinterestisnowcalculatedon
thelesseramount.Overtime,youwillpaymoreoff
yourcapitalamounteachmonth.
How are my payments recorded?
Wewillopenahomeloanaccountinyourname.
Yourmonthlyinstalmentswillbepaidintothis
account.Wewillsendyouastatementofthis
accounttwiceayear,showingthedateonwhich
paymentsweremade,theamountspaid,the
interestchargedandthebalanceowingon
theaccount.
Ifyoupayyourinstalmentusingasalarydeduction
ordebitorder,you’llalsoseethesepaymentson
thestatementofthesavingsorcurrentaccount
fromwhichthemoneyisdrawn.
Can I pay more than my instalment each month?
Yes,ifyoucanaffordit,youshould.Itiscalled
acceleratedpayments.Ifyoupayalittlemoreon
yourinstalmenteachmonth,youwillreduce
therepaymentperiodofyourbondandsave
alotofmoney.
What happens if I pay my home loan instalment
after the due date or I cannot afford to pay
my loan?
Non-paymentonyourhomeloanmayaffectyour
abilitytogetcreditinthefuture.Itisimportantto
makepaymentseverymonthontheduedateto
avoidyouraccountgoingintoarrears.
Itisalsoimportanttomakesurethatyouearn
enoughmoneytorepayyourloanandstickto
yourbudget.Payyourhomeloaninstalmentsfirst
anddonotoverspendonotherthings.Budgeting
ishowyoukeeparecordofyourmonthlyincome
andexpenses.
Thereareseriouseventsthatwouldaffectyour
abilitytomakeyourmonthlyinstalmentssuchas
retrenchment,lossofemploymentorpartner’s
income,shortpayandillhealth.Youshould
approachusifyourunintoproblemsandgetadvice
immediatelyifyouarenotabletomakeyour
monthlyrepayments.
Ifyoudonotmakeapaymentatall,wecanevict
youandrepossessyourhomeasitisthesecurity
foryourloan.
17
You can contact our Customer Debt Management
(CDM) department on 0860 102 270 if you are
having financial difficulty and want to discuss
your options with us.
How can I use my home loan to make alterations
and improvements, and what are the options to
refinance my loan?
Renovatingahomeispartofmaintenance.For
example,ifyourepaintthehouseandreplace
gutters.Theseexpensesusuallypreventyour
propertyfromdeterioratingbutwillnotcontribute
toitsvalue.Youmayincreaseitsvalueifyou
upgradethepropertybyreplacingcarpetswith
tiles,retilingthebathroomoraddanotherroom.
Theseitemsareconsideredascosmeticandany
increaseinthevalueofthepropertyisminimal
comparedtotheirretailcost.
• Furtheradvances–ifyourpropertyincreasesin
valueyoucanregisterasecondbondtoaccess
additionalfunds.
• AccessBond–youcanwithdrawavailablefunds
fromyourAccessBond.
• Re-advance–ifyoudonothaveanAccessBond
youmayapplyforare-advancetoaccesssome
oftheamountyouhavealreadypaid.
When can I sell my house?
Youcansellyourhousebeforeyourloantermisup.
Youwill,however,havetogiveus90days’written
noticeofyourintentiontosettleyourhomeloan
otherwisewewillchargenoticeinterest.Youshould
contactusassoonasyoudecidetosellyourhome.
Remember:Ifyouhavelookedafteryourproperty
andpaidyourmonthlyinstalmentsontime,you
mayhavesomeequity(value)inyourproperty.
Oncethebalanceowingonyourhomeloanispaid
andtheothercostsinvolvedinsellingtheproperty
aresettled,theamountleftoverisforyou.Youcan
usethismoneyasadepositonanotherproperty.
Rights and obligations
Whatareyourrightsandobligationsasahome
buyerandhomeloancustomer?
Amortgageloanmaybeyourmostimportantfinancial
commitment.Itisimportantforyoutounderstand
thewiderresponsibilitiesandrightsthatyouhave
asahomebuyerandhomeowner.Pleasealsorefer
toChapter10–NCA.Thefollowingaresomeofthe
importantthingstokeepinmind:
• AftersigningtheOffertoPurchaseyouhavea
cooling–offperiodoffive(5)dayswhereyoucan
withdraworcanceltheOffertoPurchase.Thisonly
appliestopropertieswithabuyingpriceofless
thanR250000.
• Oncethefive-dayperiodhaslapsed,theOfferto
Purchaseisalegallybindingcontractandifyou
terminateittherecouldbelegalimplications.
• Makesurethatyouhaveviewedyourpropertyand
thatitmeetsyourrequirements.Makesureyou
arehappywithanyclausesregarding,forexample,
occupationdateandoccupationalrent.
• Youshouldbesatisfiedthattheselleroroccupant
willleavethepropertywillinglywhenrequired.
• Youmayaskfortransferofthepropertytobe
delayeduntiltheselleroroccupanthasleftthe
property.
• Ifamonthlyhousingsubsidyfromyouremployer
applies,itisyourresponsibilitytoarrangethe
paperworkwiththemtoputthesubsidyinplace.
• Ifyouremployerdeductstheinstalmentfromyour
salaryandthenpaysus,itisyourresponsibilityto
letyouremployerknowiftherepaymentamount
changes.
• Issuesofhomequalityaretheresponsibilityofthe
seller,builderordeveloper,andyouasthebuyer.
Homesthatarelessthanfiveyearsoldmustalso
haveaNationalHomeBuildersRegistrationCouncil
LimitedWarranty.
• Rememberthatyourhomeloanrepaymentdoes
notcoverwater,electricity,andratesandtaxes.You
mustpaythemunicipalityorserviceproviderdirectly.
• Itisimportantthatyoumaketherepaymentson
yourhomeloantom,akesureyoukeepahealthy
creditrecord.
• Ifyoufinditdifficulttomakerepaymentson
yourhomeloan,contactusassoonaspossible.
Wewillhelpwherepossibletorearrangeyour
repaymentsormakeanalternativeplanwithyou.
• Youhavetherighttoapproachadebtcounsellor.
Ifyouenterintodebtreviewwithadebtcounsellor,
youwillnothaveaccesstoanyfurthercreditor
loansfromallcreditproviders,notonlyus,until
yourfinancialpositionhasimproved.
• Ifyoudonotmaketherequiredrepaymentson
time,wemayendyouragreementandtakelegal
actionagainstyou.
Ifwehavetoendyouragreementearlydueto
non-payment:
• Wewillletyouknowinwritingandchargeyou
forthecostsofservingthatnotice.
• Youwillstillbeliableforthebalanceoutstanding
onyourloan.
• Ifyoudefaultontheloanatanytime,wehave
therighttorecoverdefaultadministrationand
collectioncostsinlinewiththelaw.
Therearesuspensiveandspecialconditionsthat
youmustkeeptobeforeyoucanbeusetheloan.
Theattorneywillpointtheseouttoyouinthe
creditagreementthatyousignattheiroffice.
• Whenyouhavepaidupyourmortgagebond
wewillletyouknowhowtodealwithannual
insurancepremiums,otherchargesand
administrativematters.
• Whensigningattheattorney’soffice,makesure
thatyoureadyourentirecreditagreementand
understandit.
Ifyoudonotunderstandanyclausesinthecredit
agreement,youarehavetherighttoasktheattorney
questionsortocontactustoexplainthemtoyou.
10 questions to ask your attorney
1. Who do I pay the deposit to?
Thiswilldependonwhatyourcontractsays.You
canpayyourdepositeithertotheestateagent
ortheconveyancersappointedtohandlethe
transfer.Theybothhavetrustaccountswhere
yourmoneyisprotected.Makesureyouget
theappropriatereceiptsandthatyoupaythe
depositintothecompany’saccount–notthe
individual’sortheseller’saccount.
2. Who gets the interest on the deposit?
Unlessotherwiseagreed,theinterestispaid
toyouafterregistrationoftransfer.Onyour
writtenauthority,bothyourestateagentand
conveyancercanarrangeforittobeinvestedin
aninterest-bearingaccount,andwillactinyour
interestsbyplacingitinthebestshort-term
investmentaccountavailable.
3. Who do I pay the occupational rent to?
Youroccupationalrentgoestotheestateagent
ortheconveyancer.Theywillusuallypayit
intotheseller’sbondaccountordirectlytothe
seller,iftheyhavepaidoffenoughoftheirbond
account.Youcouldpayitdirectlyintotheseller’s
bondaccountifagreed,butyoumayberequired
toprovideproofofpaymenteachmonth.
4. When will I have to sign transfer documents?
Thismayonlybeafewweeksafterthesale
agreementissigned.Usuallyyourconveyancer
willwaituntilthebondisgrantedandtheyhave
receivedthecancellationfiguresfortheseller’s
existingbond.Onlythencantheguarantee
authorityformsbefilledinandandsigned.
Youcanphonetheconveyancerforanupdate
atanytime.
18
5. How long will the transfer take to register?
Thisdependsonthecircumstancesanddue
datesforthebondgrant,andontheguarantees
stipulatedintheDeedofSale.Theaverageis
aboutthreemonthsfromthedateofsale.
Whentherearenocomplications,registration
canbecompletedwithintwomonths.Where
therearecomplications,registrationcanbe
delayed.Insuchcases,youwillneedtostayin
touchwithyourconveyancer.
6. What will my transfer and bond costs be?
Yourestateagentandattorneyshouldbeable
toanswerthisquestionbasedonascheduleof
transferandbondcosts.Theactualtransferfees
dependonthebuyingpriceoftheproperty.
Bondcostsdependonthetotalloanamount
registeredandwhetheryouarebuyinginyour
ownnameorinatrust,closecorporationor
company.Yourattorneywillgiveyouyour
exactcosts.
7. When must I pay my transfer costs?
Thisusuallyhappensafewweeksafterthesale,
whenyousignyourdocuments.Yourconveyancer
(Whohastopaythetransferduty)willneed
paymentinadvance.Thetransfercostsarethe
majorchargeonmosttransfers–aswellastherates
orleviesduetogetaclearancecertificate.Donot
delaymakingapayment–itwilldelaythetransfer.
8. Who will register the mortgage bond?
Wehaveapanelofconveyancers,andoneof
thesewillbeinstructedtoregisteryourbond.
Ifthetransferconveyancerisoneofthose
onthepanel,theywillprobablydothebond
registrationaswell.Thebondcostswillbethe
same,thoughyourtransfermaygothrough
fasterifthesameconveyancerdoesboth.
9. Who will contact me
on registration?
Yourconveyancershouldcontact
youondateofregistration.Youwillalso
begivenafinalstatementoftheaccount.Your
estateagentmayalsophoneyoutoconfirm
registration.Wewillsendyoualettertoletyou
knowoftheregistrationofyourbondandthe
dateyourfirstinstalmentisdue.
10. Where will I get the keys to the property?
Itisbesttomakeanarrangementwithyour
estateagenttopickupthekeysfromthemon
theagreeddayofoccupation.
19
Chapter 6 – Contracts
What is a contract?
Acontractisawrittenagreementbetweentwoor
morepeople.
Inacontract,thesepeoplearecalledtheparties.
Acontractliststhethingsthepartiesagreeto.
Thesearecalledthetermsandconditions.
Thepartiessignthecontractonlywhentheyclearly
understandandagreetothetermsandconditions.
Assoonasthecontractissigned,thelawsaysit
islegallybinding.Eachpartymustkeeptoitsside
ofthedealandneitherpartycanpulloutofthe
agreement.
Different contracts in the home-buying process
Inapropertytransactionlikebuyingahome,there
areanumberofcontractsthatyouenterinto.
Theyare:
1. An Offer to Purchase
AnOffertoPurchasemusthavethefollowing
information:
• Adescriptionoftheproperty,includingstand
number
• Addressandsize
• Thebuyingprice
• Thedateofoccupation
• Theamountofoccupationalrent
• Whatfixturesandfittingsaresoldwiththehouse
• Thetimeyouhavetoarrangefinance.
Thefollowingareimportantthingstoknowabout
anOffertoPurchase:
• AfteryouhavesignedtheOffertoPurchase
youhaveacooling–offperiodoffive(5)days
inwhichyoucanwithdraworcancelit.Thisonly
appliestopropertieswithabuyingpriceless
thanR250000.
• Oncethefivedayshaveexpired,anOfferto
Purchaseisalegallybindingcontract.Ifyouend
thecontracttherecouldbelegalimplications.
• Makesurethatyouhaveviewedtheproperty
anditmeetsyourneeds,andthatyouarehappy
withanyclausesabout,forexample,occupation
dateandoccupationalrent.
• Youshouldbesatisfiedthattheselleroroccupant
willleavethepropertywillinglywhenneeded.
• Youmayaskforthetransferofthepropertyto
bedelayeduntiltheselleroroccupanthasleft
theproperty.
2. Home loan agreement
Whenyouapplyforahomeloanfromus,yousign
acontractcalledaloanagreement.Signingthe
agreementmeansyouagreetoallthetermsand
conditionsoftheagreement.Youmustreadallof
thetermsandconditionsverycarefullybeforeyou
signtheagreement.Ifyouhaveanyquestions,
pleaseaskoneofourrepresentativesoralawyerto
explainthemtoyou.
3. Building contract
Thisisacontractyousignwithabuildingcontractor
tohaveyourhousebuilt.SeeChapter8–Building
loans–formoreinformationaboutbuildingcontracts.
Breach of contract
Ifyoubreakanyofthetermsandconditionsof
theagreement,youwillbeinbreachofcontract.
Forexample,ifyoudonotpayyourfullinstalment
amountbytheduedate.
Whathappensifyouareinbreachofyourhome
loanagreement?
20
Ifyoudonotpayaninstlament,thefollowingcan
happen:
• Wewillletyouknowinwritingthatyouhavenot
paidtheinstalmentduetous.
• Youwillbeaskedtocontactustomake
arrangementstorectifythesituation.
• Ifyoudonotcontactus,andyouraccount
remainsinarrears,wewillhandyouraccount
overtoourlawyers.Yourhousecouldbetaken
fromyouandsoldtosomeoneelse.
• Themoneywegetfromthesaleofyourhome
willbeusedtopayofforreducetheoutstanding
loanamount.
• Youwillstillberesponsibleforanymoneyowing
tousafteryourhousehasbeensold.
• Yourcreditrecordwillshowthis,whichwillmake
itdifficultforyoutogetcreditinthefuture.
You can contact our Customer Debt Management
(CDM) department on 0860 102 270 if you are
having financial difficulty and want to discuss
your options with us.
Chapter 7 – Wills
Making a will
Duringyourlifetimeyoucollectpossessionscalled
yourassets.Theycouldbe:
• Acar
• Money
• Abusiness
• Ahouse
Duringyourlifetimeyoucanalsoincurliabilities.
Youhaveanobligationtopaytheseaccountsand
debts.Theycouldbe:
• Debts,likehirepurchase
• Loanagreements
• Storeaccounts
• Schoolfees.
Yourestateismadeupofassetsandliabilities.When
youdieyourassetsandliabilitiescontinuetoexist.
Yourestateisnowcalledadeceasedestate.Your
relativeswillneedtoknowwhattodowithyour
estate.Youareresponsiblefordecidingwhatisdone
withyourestateandyouwillneedtodrawupawill.
Awillisadocumentthathasinformationabout
yourestateandsayswhatmusthappentoitwhen
youdie.Awillletsyoumakethedecisionastowho
shouldinherityourhouse.Asahomeowner,it’s
importanttohaveawill.
Inyourwill,younamethepeoplewhomyouwant
toinherityourestate.Thesepeoplearecalledyour
beneficiaries.Theycanbeyourspouseorpartner,
yourchildrenorrelatives.
Ifyoudieandthereismoneyoutstandingonyour
homeloan,itwillhavetobepaidbeforeyour
beneficiarieswillbeabletoinherittheproperty.
Forthisreason,werecommendedthatyouhave
lifecovertopayoffyourhomeloansothatthe
propertycanbetransferredtoyourbeneficiaries.
Speaktoafinancialconsultantatyournearest
branchtohelpyoudrawupawill.
21
Chapter 8 – Building a house
Ifyouhavechosentobuildahouseinsteadof
buyinganexistingproperty,thereisinformation
youshouldknow.
Chooseabuilderordeveloperwhoisregistered
withtheNationalHomeBuildersRegistration
Council(NHBRC)
The National Home Builders Registration
Council (NHBRC)
TheNHBRCisabodythatprotectshomebuyersby
settingandmaintainingstandardsinthehome-
buildingindustry.
Check list
• Checkthereputationofthehomebuilder.
• Asktoseethehomebuilder’scurrentNHBRC
registrationcertificate.
• PhonetheNHBRCtoconfirmthebuilderisstill
registered.
• Taketimetoinspectsomeofthehousesthe
builderhasbuiltandcompleted.
• Makesurethatthebuildergivesyouacontract
forthebuildingofyournewhome.
Beforebuildingstarts,youwillneedtosigna
buildingcontractwhichmustinclude:
• Thestandnumberonwhichthehouseisbeingbuilt.
• Thesizeandpriceofthelandyouarebuying.
• Alistofallinternalandexternalfixturestobe
fittedbythebuilder,forexample,lightfittings,
plugs,ceilingsandroofcovering.
• Buildingexpenses.
• Thecostofdrawinguptheplansandlodging
themwiththelocalauthority.
• Thetimeitwilltaketobuildthehouse.
• Aguaranteefromthebuilderthatanymajor
problemswiththehousewillbefixed,freeof
charge,withinthefirstthreemonthsafteryou
movein.
• Theagreementmuststatethatifwedonot
grantyouabond,theagreementfallsaway.
Youcanapplyforaloanoncethebuilderhas
givenyouaquotationandyouhavesigned
theagreement.
Assoonasyourhomeloanisregisteredandthe
contractsigned,buildingcanbegin.
Wewillpaythebuilderordeveloperatcertain
stagesinthebuildingprocess.Forexample,
thebuilderwillgettheirfirstpaymentoncethe
foundationshavebeenlaid.
Letter of satisfaction or ‘happy letter’
Whenthehouseiscompleted,thebuilderwilllet
youknowwhenyoucanmoveintoyournewhome.
Thebuilderwillgiveyoualettertosign.Thisletter
iscalledadeliverynote,letterofsatisfactionora
happyletter.
Youmustbesatisfiedwiththebuilder’s
workmanshipbeforeyousignthehappyletter.
Donotsignitifyouarenotsatisfiedwiththehouse
orthebuilding.Donotmoveintothehouseuntil
thebuilderhasfixedeverythingyouwantfixed.
Prepareasnaglistwithallthethingsthatyouare
notsatisfiedwithandgiveittothebuilder.
Oncethesehavebeenrectifiedandyouare
satisfiedyoucansignthehappyletter.
Wewillpaythebuildertheirfinalpaymentonly
afteryouhavesignedthehappyletter.
Pleaseaskyourhomeloanconsultantforour
BuildingLoanbrochurewhichcontainsmore
informationaboutbuildingahome.
23
Chapter 9 – Sectional title
We also grant home loans for sectional title
developments
What do you buy?
Whenyoubuyintoasectionaltitlecomplexyou
buyasectionorsectionsofthecommonproperty.
Thesearecollectivelyknownasaunit.
In a sectional title development you own a unit
Thiscanbeaunitinacomplexorafree-standing
house.Theunitmayalsohaveanexclusiveuse
area,suchasagardenorparkingbay.Althoughby
lawitbelongstothesectionaltitledevelopment,
onlytheunitownerhastherighttousethisarea.
Youwillalsoshareownershipofthecommonareas,
likethedriveways,grassedareasandlifts.
Everyownerhastherighttousetheseareas.
What part of the property do you own if you buy
into sectional title?
Youwillbuyasectionplusanundividedshareof
thecommonproperty.Takentogether,thisproperty
iscalledyourunit.
What part of the building makes up a section?
Asectionextendstothemid-pointofouteror
dividingwalls,thelowerpartoftheceilingandthe
upperpartofthefloor.
What is common property?
Thecommonpropertyisthatpartofadevelopment
thatdoesnotformpartofanysection.Structures
andareasinthiscategoryinclude:
• Driveway
• Garden
• Swimmingpool
• Corridors
• Lift
• Entrancefoyer
• Parkingbay
• Outerwalls
• Foundations
• Roof.
Who controls the common property?
Commonpropertyisalwayscontrolledbythe
bodycorporate.Itsdecisionsarelegalandbinding.
Whatthismeansisthateventhoughpartsofthe
commonpropertyaredesignatedasexclusive
useareas,theyareunderthecontrolofthebody
corporateandaresubjecttotherulesofthescheme.
What is an exclusive use area?
Itisanaspectofthepropertythatyoudonotown,
butoverwhichyoualonehaveuse.Thiscouldbe
anyofthefollowing:
• Parkingbay
• Garden
• Patio
• Garage
• Storeroom.
Readthroughyourcontractcarefullytofindout
whichareasformpartofthepropertyyouwant
tobuy.Theareasshouldbemarkedclearlyonthe
propertyplanandthecontractorshouldexplainthis
toyouindetail.Askyourestateagentorlawyerfor
advicebeforeyoucommityourself.
The body corporate
Thebodycorporateismadeupofallthepeople
whohaveboughtaunitinasectionaltitle
development.Eachownerhasanequalvoteonhow
tomanagethedevelopment.Tomakemanaging
thedevelopmenteasier,thebodycorporate
electsasmallgroupoftrusteesfromamongthe
residentstomakedecisionsonitsbehalf.Usually,
thetrusteeshavetheskillstomanageasectional
titledevelopmentproperly.Thetrusteesdrawupan
annualbudget,decideonhouserulesandmanage
therunningofthedevelopment.Sometimesthe
trusteeswillusetheservicesofamanagingagent
tohelpwithtasks,forexample,calculatingand
collectingmonthlyleviesfromeachowner.
24
What does the body corporate do?
Itcontrolsandrunsthescheme.Trusteesare
appointedbythebodycorporatetoadministerthe
complexonadailybasis.Thetrusteesalsomake
majordecisionsaboutthecomplex.
Who are the trustees?
Thetrusteesareusuallyownersofunitswho
havebeenentrustedwiththetaskofdaily
administrationofthedevelopment.Theyare
appointedbythebodycorporateatanannual
generalmeeting(AGM).
Financial statements
Itisimportantthatyoucheckthefinancial
statementsofthecomplexandmakesurethatthe
trusteesarenotincurringanydebtsonyour
behalfsincethiscouldputyourpropertyatrisk
fromcreditors.
Who may not be a trustee?
• Themanagingagent;
• membersoftheirstaff;and
• anemployeeofthebodycorporate.
Levies
Apartfromtheusualmonthlyexpenses,suchas
homeloaninstalmentsandwaterandelectricity
bills,ownersofsectionaltitleunitsalsopaya
monthlylevytotheirbodycorporate.Thislevy
goestowardsthecostsofrunningthe
developmentsuchas:
• Maintenanceandrepairstotheoutsideoftheunits
• Maintenanceofthecommonareas
• Homeowner’sinsurance
• Municipalratesandtaxesforthelandonwhich
thedevelopmentisbuilt
• Waterandelectricityforthecommonareas.
Allthechargesareputtogetherandthetotalcost
issharedbetweentheowners.Thebiggeryour
sectionis,thebiggeryourshareofthetotalcosts
willbe.Ifasectionaltitledevelopmentseems
expensive,remember,astheownerofafree-
standinghouse,youwouldberesponsibleforthese
costsbyyourself.
Itisimportanttopayyourmonthlyleviesasnon-
paymentcouldresultinyourpropertybeingsoldby
thebodycorporatetorecovertheunpaidlevies.
Pleaseaskyourhomeloanconsultantformore
informationaboutsectionaltitles.
25
Chapter 10 – The National Credit Act
What is the National Credit Act?
TheNationalCreditAct(NCA)cameintoeffect
on1June2007.TheaimoftheNCAistoprotect
youfromundueriskandtocreateafairandnon-
discriminatorymarketplaceforlending.
Anumberofpracticessuchasrecklesslending,
lackoftransparency,discriminationandexploitation
ofconsumerswereidentifiedintheconsumer
creditmarket.Itwasrecommendedthatthesebe
correctedthroughtheintroductionoftheNCA.
Facts about the NCA
• Improveddisclosure
TheNCArequiresacreditprovidertogiveyoua
quotationandpre-agreementstatementbefore
youenterintoacreditagreement.Thequotation
isvalidforaminimumoffivebusinessdaysand
mustgivethefullcostofthecredit.Youwillalso
getacopyofthedocumentthatrecordsthe
agreement,whichmustbeinplainlanguage,
clearandtothepoint.
• Impactoncreditbureauxinformation
TheNCAplacesobligationsoncreditbureaux
abouttheaccuracyandretentionperiodsof
creditinformation.Theseinclude:
a)Thebureauxmustmakesurethatinformation
heldaboutyouisaccurate,uptodateand
confidential.
b)Theykeepsubjectiveadversedata–these
changefromthreeyearstooneyear.
c) Whenyoulodgeadisputeorquerywitha
registeredcreditbureauabouttotheinformation
onitsrecords,itwillneedtoinvestigatethe
disputewithin20daystofindoutitsvalidity.
Acreditprovidercannotdeclineyourapplication
ifyouhaveenteredadisputeorhavelodgeda
querywithacreditbureau.
• Unsolicited(unwelcome)selling
TheNCAspecificallybanscreditprovidersfrom
harassingyoutoapplyforcreditortoenterinto
acreditagreement.Therearealsolimitations
regardingyourenteringintoacreditagreementin
aprivatedwellingoryourplaceofemployment.
• Marketingpractices
TheNCAsetsoutrequirementsfor
advertisements–theymaynotusemisleading,
fraudulentordeceptiveinformation.Itrequires
thatifanadvertisementreferstothecostof
credit,itmustgivetheinstalmentamount,the
numberofinstalments,theinterestratethat
isapplicable,andtheresidualorfinalamount
payable,whereapplicable.
• Recklesscredit
TheNCAhaswaystodealwithdebtandto
createalternativesifyouhavetoomuchdebt.
Recklesscreditgrantingisnotallowedunder
theNCA.
Recklesscreditisdefinedasthefollowing:
a)Givingyoucreditwithoutfirstcheckingyour
abilitytotakeonfurthercredit.
b)Youbecomeoverindebtedaftertakingon
newcredit.
c) Yousignedthecreditagreementbutdid
notgenerallyunderstanditscosts,risksor
obligations.
• Thecontract
TheNCAtriestoeducateyouaboutyourrights.
TheActprotectsyoufromunfairdiscrimination
onthebasisofrace,genderorothergroundsset
outintheConstitution.
26
• Interestrates
TheNCAstatesthatacreditprovidermaycharge
aninterestratethatvariesduringthetermof
theagreement,butonlyifthevariationislinked
toareferencerate.TheNCAalsocapscharges
andinterestowedunderthecreditagreement
whenyoufallintoarrearsonyourloanorcredit
agreements.Furthermore,youwillbenotified,
inwriting,ofanychangestointerestorcredit
feesorcharges.TheNCAalsolaysdownmaximum
serviceandinitiationfees,andinterestrates
dependingonthetypeofcreditagreement.
• Costofinsurance
TheNCAstatesthatacreditprovidermayneed
youtotakeoutcreditinsurancefornolonger
thanthedurationofthecreditagreement.
i) Inthecaseoflifeinsurance,theamountof
insurancemaynotbemorethanthetotal
outstandingobligationtothecreditprovider
undertheagreement.
ii) Inthecaseofinsuranceoveranimmovable
asset,theamountmaynotbemorethanthefull
assetvalueofthatproperty.
Inaddition,youmustbetoldaboutyourrightto
waiveaproposedpolicyfromthecreditprovider
andtakeoutapolicyofyourchoice.
Wherethecreditproviderarrangesinsurancefor
you,itmaynotchargeanyadditionalamountover
andabovetheactualcostoftheinsurance.
• Disputeresolution
TheNationalCreditRegulator(NCR)actsas
aninformalcourttosortoutanyproblemsthat
youexperiencewithcredittransactions,credit
bureauxandcreditproviders.
27
Chapter 11 – Useful contact numbers
Type of enquiry Contact number
General enquiries 0860 123 001
Application forms (new and further loans) 0860 123 001
Property information service 0860 123 001
Short-term insurance
- Sales and quotations
- Service
0860 123 474
0860 123 741
Home Loan Protection Plan 0860 123 911
Home owner’s insurance
- Service
- Claims
0860 121 141
0860 123 444
Customer debt management (if you are having financial difficulty and want to discuss options with us)
0860 102 270
Properties in possession – marketing 0860 103 869
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Chapter 12 – Income and expenditure guide
Youcancopythistohelpyouwithyourmonthlybudgeting
Net monthly income
Net monthly income Explanation Amount
Monthly salary (principal applicant)
This is the gross salary reflected on your payslip or the amount deposited in a bank account on a regular basis if you are self-employed.
R
Monthly salary (other applicants)
This is the gross salary reflected on your payslip or the amount deposited in a bank account on a regular basis if you are self-employed.
R
Allowances in cash Any cash allowance (provided it can be proven as sustainable over a period of time).
R
Commissions Any commission earned averaged over 12 months with the first and last month excluded.
R
Investments Any investment income, for example, dividends or interest averaged over the year.
R
Maintenance Any cash you get in the form of maintenance. R
Grant subsidies Any subsidises you get on a monthly basis, such as a housing subsidy from your employer.
R
Rental Rental income you get (this is the rental estimate that you give us). R
Pension Any pension amounts you receive. R
Other Any other income that may be acceptable to us. R
Total net monthly income
Total of all income R
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Monthly expenditure
Salary deductions Explanation Amount
Tax – PAYE/SITE The amount of PAYE/SITE shown on your payslip. If you are a provisional tax payer then annual statements can be used or it can be estimated for each month.
R
Pension The amount of money deducted each month for pension or provident fund contributions as shown on your payslip.
R
UIF The amount of UIF shown on your monthly payslip. R
Medical aid The amount deducted for medical aid contributions as shown on your monthly payslip.
R
Monthly living expenses
Explanation.
Insurance premiums Any insurance premiums: • Household contents/vehicle • Home owner’s comprehensive insurance (an estimated value,
if applying for a new loan)• Cellphone • Funeral • Medical.
R
Life assurance premiums
Any life assurance premiums, including death, disability and retrenchment cover.
R
Electricity and water Average of 12 months’ electricity and water bills for all other homes as well as for the home for which you are applying for a loan. You must assume this and estimate it for the home loan you have applied for.
R
Rates, taxes, and levies
Any rates and taxes or levies applicable to other homes as well as for the home for which you are applying for a loan. You must assume this and estimate it for the home loan you have applied for.
R
Accommodation rental
Any accommodation rental. If you are currently renting but the home loan will replace your place of residence, then this can be left blank.
R
Leases Any lease agreements, including rental and vehicle leases. R
Hire purchase agreements
Any Credit agreements. R
Telephone and cellphone, including line rental
Average of 12 months’ telephone and cellphone bills. R
Alimony or maintenance
Any amounts you need to pay every month in terms of alimony or maintenance.
R
Planned savings Any amount that you have planned to save on a monthly basis. R
Donations and pocket money
If any funds you pay for pocket money or donations to charity on a monthly basis.
R
Education – fees, books and accommodation
Any education fees that you need to be pay on a monthly basis. Average of 12 months.
R
Clothing Any clothing expenses, excluding clothing accounts paid on a monthly basis.
R
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Groceries The amount you pay for groceries on a monthly basis averaged over 12 months.
R
Medical bills Any medical bills averaged on a monthly basis, excluding medical aid.
R
Domestic and garden help
Monthly salaries of domestic and/or garden employees. R
Security Monthly premiums for security. You need to be assume and estimate this for the home for which you are applying for a loan.
R
Transport Any petrol, bus fare or parking fees averaged for 12 months, excluding any car repayment. If you have a tracker facility, you need to add this.
R
Entertainment Any entertainment expenses averaged over 12 months. R
TV rental, M-Net and DSTV subscription
Monthly subscriptions for TV rentals, M-Net and DSTV. R
Subscriptions Any other monthly subscriptions, for example, Internet service provider.
R
Suretyship payments The monthly surety payments need to be taken into account only if you have been called on to honour the surety agreement.
R
Retirement annuity contributions
Any monthly retirement annuity contributions. R
Funeral plans Any monthly funeral plan payments other than those specified under insurance premiums.
R
Retail store accounts Any monthly payments made on retail store accounts, for example, Edgars.
R
Other financial agreements
The monthly instalment or payment you make on credit cards and other loans, like vehicle and asset finance or student loans, including other home loans still in existence.
R
Other (specify) Any other living expenses not specified above. R
Total monthly expenses
Total of all expenses R
Total monthly income R
Minus total monthly expenses R
= Surplus R
Thesurplus(theamountleftoverafterexpenses)mustatleastcoverthetotalinstalmentofyournew
homeloan.
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Authorised financial services and registered credit provider (NCRCP15)The Standard Bank of South Africa Limited (Reg. No. 1962/000738/06). SBSA 62106 08/10