Bond Advice!

[yebocan]

You may for example only get a bond of upto 30% of your gross salary, but even that depends on affordability.

Then you would need a deposit, about 30% off the property purchase price these days once more. Let alone the finance charges, ie a 750 000 property will cost you about R70 000 in finance charges (lawyers fees, transfer duty etc). Remember you normally have to pay both the transfer and the bond attorney. Both comes with their own separate bills.

But there are ways you can score also too. if for the finance charges, and part of the deposit. If you have grown your retirement fund over some period, and your retirement fund supports it, you can get a pension backed homeloan or part of it. That allows you depending of the fund to take a loan guaranteed against 60% of your pension fund. Some offer less. But with that it will be enough to cover the finance charges and deposit.

If you however don't have a deposit, or the finance charges then you need to ask for an loan above the value of the property. Banks generally don't like to approve these as it carries great risk to them.

Your best bank option that's easiest to grant home loans is Standard Bank. From what I understand, Old Mutual also offers a good home loan assistance as well as SA homeloans.

From there you can decide what you can afford. When you make an offer to purchase you have to look at the house and all the things that needs fixing (big cracks can be due to structure damage, or no support beams properly installed. Leaking roof is a big no no, as generally cost a fortune to fix. Best to get a fixer upper in a good area, and then do a lot of the work yourself. Just do it properly or will give you a bigger headache later.

I've met a lot of people think they can get 80% of their salary and they will get huge bonds. For the bank it's a risk and generally they wont even bother.

Oh try upgrade your account to max what you can. ie if with standard and you are on the cheapest option, push higher, as they would be more eager to help you and give a higher rate. You get better assistance on Platinum or Private Banking then on a blue or gold card.

Transfer duty : 0-900k - 0%

http://www.sars.gov.za/Tax-Rates/Pages/Transfer-Duty.aspx

 

[saturnz]

Silly question time,

But can you apply for a bond without having a property to buy ( title deeds )

I see I can't apply on SA home loans without one.

My plan was to get the best Bond possible. Then find a Property

generally you find the property, then apply for a bond

you can try to get pre-approved bonds, but the finer details of these things I'm unsure of

 

[The_Ogre]

Let SA homeloans be your last option. In my experience they always gave me the worse interest rate, and I think that's probably because their target market is the guy who got rejected from all banks because of his risk profile.

 

[RossCo_]

Thanks again guys!

 

[vic777]

Silly question time,

But can you apply for a bond without having a property to buy ( title deeds )

I see I can't apply on SA home loans without one.

My plan was to get the best Bond possible. Then find a Property

Won't work - the bank will insist on a valuation before offering you a final grant

 

[The_Ogre]

The steps are:

1. Find a property (Property24, privateproperty, etc)
2. Contact the owner or more likely, the estate agent
3. Arrange for a viewing
4. If you're happy with the place negotiate the selling price down
5. Ask the agent for the offer to purchase or deed of sale
6. Complete the form - a decent agent will have all clauses completed already, you will just have to sign and stipulate your deposit. Make sure the occupation clause is stipulated, ie. if you move in before the transfer onto your name is complete, you will have to pay the seller rent. If the seller stays on after the transfer, they have to pay YOU rent.
7. You are responsible for the attorney costs, the seller for the commission of the agent and all certifications of the property
8. Once you've both signed the OTP / DOS, ask the agent for a copy, again, a good agent will do all the legwork for you since the seller will pay him a commission for the sale. So it's in his (agent) best interst to facilate the sale between you and the seller.
9. The agent will then contact you after he'd received offers from all the banks and SA Homeloans if your record isn't so lekker. You then choose the best offer.
10. The bank will send someone to the property to inspect / valuate the place.
11. After this you sign the bond documents and the transfer process begins
12. The agent will give the form

edit: I have no idea what I intended to say at point 12

 

[hondaboysa]

Buy from a developer - no transfers/conveyance fees since you'll be the first owner. Stay in that house for two years after having pumped as much as you can into the bond.

Flip the house after those two years and use the sales profit as the deposit and transfer fees to buy the place you REALLY want. Use some of the sales profit to buy furniture and appliances.

I did yes - profit covered everything!

 

[vic777]

The steps are:

1. Find a property (Property24, privateproperty, etc)
2. Contact the owner or more likely, the estate agent
3. Arrange for a viewing
4. If you're happy with the place negotiate the selling price down
5. Ask the agent for the offer to purchase or deed of sale
6. Complete the form - a decent agent will have all clauses completed already, you will just have to sign and stipulate your deposit. Make sure the occupation clause is stipulated, ie. if you move in before the transfer onto your name is complete, you will have to pay the seller rent. If the seller stays on after the transfer, they have to pay YOU rent.
7. You are responsible for the attorney costs, the seller for the commission of the agent and all certifications of the property
8. Once you've both signed the OTP / DOS, ask the agent for a copy, again, a good agent will do all the legwork for you since the seller will pay him a commission for the sale. So it's in his (agent) best interst to facilate the sale between you and the seller.
9. The agent will then contact you after he'd received offers from all the banks and SA Homeloans if your record isn't so lekker. You then choose the best offer.
10. The bank will send someone to the property to inspect / valuate the place.
11. After this you sign the bond documents and the transfer process begins
12. The agent will give the form

edit: I have no idea what I intended to say at point 12

Add to that, you can negotiate the occupational rent due in point 6

 

[vic777]

Another issue to consider:

Pay for someone to inspect the property, even if it is a bit pricey. Have them check the structure, plumbing, wiring, check for termites, etc. It is VERY costly and difficult to try and litigate about issues you find after the sale is done.

 

[calgal90]

I was in a similar situation recently, and I ended up buying a property and renting it out. Here's my advice (purely based on my experience);

Try buy directly from the developer, then you don't have to pay transfer fees and sometimes bond costs are excluded too. This is what I did and I did not have to pay transfer fees or bond costs which was great. That's the only reason that I managed to get into the market. I went through the developers bond originators and they were great. They went to all the banks and I got 100% bond at prime which I was happy with.

Do your research too, so if you plan on renting the place out for the first few years, look at the rental prices in the area to make sure you can afford the shortfall every month. Also, keep in mind that a bond is not the only monthly cost of owning a home, you also need to pay levies (if applicable), rates and taxes, insurance (this is normally covered in your levy if you are in a complex / block of flats) and agents fees or rental insurance fees if you plan on renting the place out through an agent or using a rental insurance company. It all adds up at the end of the day.

Good luck! Get your foot in the market as soon as possible!

 

[The_Ogre]

Add to that, you can negotiate the occupational rent due in point 6

Another issue to consider:

Pay for someone to inspect the property, even if it is a bit pricey. Have them check the structure, plumbing, wiring, check for termites, etc. It is VERY costly and difficult to try and litigate about issues you find after the sale is done.

Yes, very good points!

 

[The_Ogre]

I was in a similar situation recently, and I ended up buying a property and renting it out. Here's my advice (purely based on my experience);

Try buy directly from the developer, then you don't have to pay transfer fees and sometimes bond costs are excluded too. This is what I did and I did not have to pay transfer fees or bond costs which was great. That's the only reason that I managed to get into the market. I went through the developers bond originators and they were great. They went to all the banks and I got 100% bond at prime which I was happy with.

Do your research too, so if you plan on renting the place out for the first few years, look at the rental prices in the area to make sure you can afford the shortfall every month. Also, keep in mind that a bond is not the only monthly cost of owning a home, you also need to pay levies (if applicable), rates and taxes, insurance (this is normally covered in your levy if you are in a complex / block of flats) and agents fees or rental insurance fees if you plan on renting the place out through an agent or using a rental insurance company. It all adds up at the end of the day.

Good luck! Get your foot in the market as soon as possible!

Most of us who don't have a rich mommy and daddy started out by buying from a developer purely for the "no fees" benefit, assuming you didn't buy a R900k+ property