ENABLING Property Buyers With Some POSITIVE FINANCIAL INFORMATION

As we are now clearly entrenched in a property buyers' market, we are aware that potential buyers need financial information and professional assistance in their purchasing decisions ...now more than ever.

We will investigate the following practical aspects regarding costs that need to be considered as well as some financing options today (definitely not all encompassing, but informative, none the less):

1. Costs that need to be considered (also some you may not have thought of) 

• The cost of ownership will entail the purchase price either in cash or made up as to the deposit and a home loan.
• The costs of transferring the property to the buyer, including:
  • Transfer duty if the price exceeds R1million;
  • Conveyancer's fees;
  • Posts and petties;
  • Fees charged by conveyancers for verification services in compliance with the Financial Intelligence Centre Act;
  • Deeds office fees;
  • Rates clearance certificate fees; and
  • The payment of pro-rata municipal rates to secure a rates clearance certificate.
• In the event of a Bond, the registration costs will include:
  • The conveyancer's fee to register the bond; 
  • Posts and petties;
  • National Credit Act fee in respect of the work undertaken by the bond registration conveyancers ito the NCA;
  • Financial institution administration fee in terms of the NCA with a maximum of R5 000,00.

2. Financing options

• Application for a Mortgage loan from a financial institution for a portion of / the whole purchase price:
  • The estate agent should pre-qualify the buyer to enable confirmation of affordability;
  • The financial institution will conduct a credit check and if no judgements are recorded, the application for a loan is likely to be successful;
  • The sale agreement will become binding on receipt of a quotation from the financial institution.

• Purchasing by Instalment Sale is made possible in terms of Chapter 2 of the Alienation of Land Act if it applies to land that is used or intended to be used for residential purposes. This methodology can apply in the event that the sale is brought about in terms of which the buyer must pay the purchase price to the seller directly in more than two instalments over a period exceeding one year. An instalment sale contract must be in writing and signed by the parties or their authorised agents acting on their behalf and must contain such information as:
  • the name and address of the existing mortgagee of the property, if any;
  • the amount of instalments and the date when instalments are payable;
  • whether the purchaser is obliged to insure the property;
  • which party is liable to pay the costs of drafting of the contract, the recording of the contract in the deeds office and the eventual transfer;
  • if the land is not yet registrable the latest date when it will become registrable (not be more than five years after the date of the conclusion of the contract);
  • when the purchaser is obliged to take transfer of the property against payment of all amounts owing in terms of the contract;  
  • a purchaser who has paid 50% of the purchase price may insist on earlier transfer of the property, if the property is registrable and the purchaser has been able to secure a mortgage loan or has the cash available for the balance; and
  • NB: the seller retains ownership of the property until the purchase price has been paid in full.

• Making use of a Kustingsbrief to ensure payment of a portion of / the whole purchase price.
  • This agreement is a mortgage registered against the property, simultaneously with transfer, by the purchaser, in favour of the seller for the purchase price;
  • The seller thus becomes the mortgagee and holds the property as security for the loan made.
  • NB: the purchaser receives transfer of ownership as soon as the kustingsbrief agreement is signed and registered.

Should you require any further information relating to the above, it is suggested that you contact our REDZetc professional agents in your area or your own legal or financial advisor. Pam Snyman, principal of REDZetc is also available at all times at 082 8000867 or pams@redzproperties.co.za