Buying a house without bond

Hamish McPanji

Hamish McPanji

Honorary Master
Joined
Oct 29, 2009
Messages
42,240
Reaction score
6,696
Location
Jhb
I have put an offer to purchase for a house. The offer includes a 50% deposit.

However being a foreigner in SA, the banks don't give you loans because despite you paying 50% upfront, cutting virtually all risk to them, they still are very nasty to foreigners tbh.

I have had an indication that my loan application might be rejected, so am thinking of sending my bank (who currently holds 75% of the value of the total purchase price of my money their accounts) a big **** you by withdrawing everything all my funds, pulling in some of my overseas investments, and paying for the house cash.

I put my offer to purchase in via an estate agent, and have been contacted by the conveyance lawyers for the deposit and some documentation.

Do I need to appoint a lawyer of my own in this scenario? As there will be no bond attorneys from the bank. What is the risks involved with this?
 
I bought my last condo cash. It is in the US, so there are obviously differences, but I still needed a lawyer since this is still a legal transaction (perhaps it wasn't strictly necessary, but was useful when dealing with things like prorata property taxes and such). The one big thing that was different is that since I was offering cash, the moment I signed, I was bound - if I backed out, I could be sued. In the bond situation, the bond contingency often allows many ways to get out of the contract if necessary (not that I've ever done this).
 
cguy said:
I bought my last condo cash. It is in the US, so there are obviously differences, but I still needed a lawyer since this is still a legal transaction (perhaps it wasn't strictly necessary, but was useful when dealing with things like prorata property taxes and such). The one big thing that was different is that since I was offering cash, the moment I signed, I was bound - if I backed out, I could be sued. In the bond situation, the bond contingency often allows many ways to get out of the contract if necessary (not that I've ever done this).
Click to expand...

Am a pretty conservative person with my capital. Reflects in the investments I make. I spent a lot of time considering this deal, and don't want to lose it.

Am also old school in a lot of ways, so my word is my bond. So it's unlikely that I will back out. The small additional advantage of no bond is that I save about R20k in bond related fees which I wouldn't have to pay, but that is but a fraction of the property cost.

Pulling out on investments that haven't reached their peak is also quite painful for me, so am a bit miffed at the whole bond thing. It also prevents me from building a credit history, I bought both my cars cash...So apart from credit cards , have no history to speak of in the 8 years I have been here
 
imranpanji said:
Am a pretty conservative person with my capital. Reflects in the investments I make. I spent a lot of time considering this deal, and don't want to lose it.

Am also old school in a lot of ways, so my word is my bond. So it's unlikely that I will back out.
Click to expand...

I agree, and wouldn't personally back out on a whim or any such thing. The main protection lost with this is that there could be things that were concealed that come to light later in the process. There is often still some legal recourse if you can prove skullduggery, but that is usually more trouble than it is worth.

I nearly bought a place in Cape Town that was advertised as a "cat lovers paradise" in the newspaper because it was a ground floor unit with a big garden and with a "large private patio". It turned out that no pets were allowed in the block at all, and the private patio was common area for the large garbage cans for the entire block (right outside the kitchen window). We caught this before we made an offer, but if it was cash and if we didn't read the rules carefully, we wouldn't have seen it (we could easily have missed it - first property, early 20's, and the naïveté to believe that we wouldn't be straight out lied to).

imranpanji said:
The small additional advantage of no bond is that I save about R20k in bond related fees which I wouldn't have to pay, but that is but a fraction of the property cost.

Pulling out on investments that haven't reached their peak is also quite painful for me, so am a bit miffed at the whole bond thing. It also prevents me from building a credit history, I bought both my cars cash...So apart from credit cards , have no history to speak of in the 8 years I have been here
Click to expand...

Not having a credit history because you've bought your house and cars cash is what I call an uptown problem. ;)

Oh, yeah - here at least, one can normally bargain down 5-20% off the price with cash, since it is so much harder to get out of. The discount is compensation for the buyer taking a higher risk, and for the seller to have much higher confidence in the sale, and a much faster path to the sale. I've heard many stories from realtors about how many offers they get where the buyer can't get a bond for that much, or the bank requires too high a deposit for the particular property type, etc.
 
Last edited:
No, no need to appoint your own lawyer. Just inform the conveyancer of your intention and arrange the transfer of your money to the conveyancer's trust account.
 
why are you buying this house? investment or consumption? (living in the house is more consumption than investment)

if for consumption, then liquidating your investments to purchase this house may prove to be expensive

if for investment, then the location of this property matters and issues such as future expected rental yield and capital growth comes into the equation
 
You just need to give the lawyers gaurantees that you will be able to pay for the place then you will get a date on which to pay over the money into the lawyers account. They will then pay it into the beneficiaries account/accounts on transfer date.

You can also get someone you know to sign surety on the bank loan or let them hold on to the title deed of another asset if they don't approve one outright. The best is to go and ask in person at a branch as the normal loan application just goes through the system and does not cater for unusual processes. A bond originator may also be worth a try.
 
Did you try SA Homeloans? They are usually a bit more flexible.
 
saturnz said:
why are you buying this house? investment or consumption? (living in the house is more consumption than investment)

if for consumption, then liquidating your investments to purchase this house may prove to be expensive

if for investment, then the location of this property matters and issues such as future expected rental yield and capital growth comes into the equation
Click to expand...
It near schools. It's below market price. I've noticed that they've upped the price another 5% on the websites since I made the offer

It's for consumption, but is an investment too for the long run
 
imranpanji said:
It near schools. It's below market price. I've noticed that they've upped the price another 5% on the websites since I made the offer

It's for consumption, but is an investment too for the long run
Click to expand...

Lol, if you listen to him for financial advice... :o

Buying is better than renting. Buying it cash means you have zero overheads like interest. So it starts making money from the day it's on your name. Buying cash and saving a crap load on interest will make a massive difference in the amount you make should you sell in about 10-20 years.

/Wish I could buy a house cash :o
 
Beachless said:
You just need to give the lawyers gaurantees that you will be able to pay for the place then you will get a date on which to pay over the money into the lawyers account. They will then pay it into the beneficiaries account/accounts on transfer date.

You can also get someone you know to sign surety on the bank loan or let them hold on to the title deed of another asset if they don't approve one outright. The best is to go and ask in person at a branch as the normal loan application just goes through the system and does not cater for unusual processes. A bond originator may also be worth a try.
Click to expand...
Have gone directly to my bank, and a bond originator. Am still waiting for response from bond originator
 
imranpanji said:
It also prevents me from building a credit history, I bought both my cars cash...So apart from credit cards , have no history to speak of in the 8 years I have been here
Click to expand...

If you lived in the US the state department, fbi, homeland security etc would have all red flagged you buy now, muslim guy buying cars and properties cash with no traceable credit history :D
 
Have only ever bought properties cash. Why would you need to appoint your own lawyer? It is the exact same deal, you use conveyancers and you just have no bond and no bond fees. Fill in all your FICA forms to prove the money is legit, that's all.
 
Pitbull said:
Lol, if you listen to him for financial advice... :o

Buying is better than renting. Buying it cash means you have zero overheads like interest. So it starts making money from the day it's on your name. Buying cash and saving a crap load on interest will make a massive difference in the amount you make should you sell in about 10-20 years.

/Wish I could buy a house cash :o
Click to expand...

ignoring opportunity cost and the benefits of leverage

but yeah whatever, what is your highest qualification in finance?
 
Milano said:
Have only ever bought properties cash. Why would you need to appoint your own lawyer? It is the exact same deal, you use conveyancers and you just have no bond and no bond fees. Fill in all your FICA forms to prove the money is legit, that's all.
Click to expand...
Some of my money I will be pulling in from US (UK is farked at the moment), how do I prove its legit?
 
You must log in or register to reply here.
Back
Top
Sign up to the MyBroadband newsletter
X