Special Condition In Home Loan Quotation

[Former member 61586]

So I have been offered a home loan. There is however one special condition (of many) that I do not quite understand. Perhaps the learned members of this forum could perhaps help me and explain it to me in layman terms.

The special condition reads as follows:

The mortgage bond will stipulate that we secure an additional sum equivalent to 25% of the bond amount.

 

[Former member 61586]

Just to add:

Have asked the bond originator via e-mail. This was ignored. So called the bank. The person in the home loans department couldn't answer me telephonically and asked that I email it to him. I am still waiting for a response.

 

[P924]

It means they will pad it by 25% to cover their costs in case of default. So you take out a R100k loan, you will sign paperwork that says R125k, but you only get R100k now, the rest only comes into play when you don't pay, for lawyers and cookies.

 

[iDOL]

Generally what it entails if you register a bond of R1mil they will now register a bond of R1,25mil - this is done for when they're forced to institute legal proceedings it covers the bond plus costs.

 

[Former member 61586]

Thank you very much guys. Really appreciate the info.

 

[Hemi300c]

It means they will pad it by 25% to cover their costs in case of default. So you take out a R100k loan, you will sign paperwork that says R125k, but you only get R100k now, the rest only comes into play when you don't pay, for lawyers and cookies.

LOL