Part One

The process involved in registering a bond or property transfer is usually straightforward and simple. Occasionally, however, the progression can be delayed by additional hurdles that arise when dealing with a deceased or mandated estate. The flow of the procedure remains the same in essence in these cases, with perhaps an added step or two. This guide serves to outline the basics of a normal purchase and property transfer.

Buying property is a huge commitment and a significant investment – and it is essential that buyers are aware not only of the costs involved, but of the processes that will be followed in order to end up with a bond or property registered in their name.

When you find a property that meets your requirements and is affordable for you, make sure to gain as much information about the property as possible before advancing. This means finding out about levies or rates and taxes, building regulations and so forth. There will of course be details specific to your own contract and procedure, but there are some basic factors that will remain consistent when purchasing a house.

  1. The Offer To Purchase

Once you have decided on a property that you would like to make an offer on, you will receive an Offer to Purchase. This may be a brief, rudimentary document that will be replaced by a more comprehensive contract at a later stage should the seller accept the offer you make.

The Offer to Purchase or OTP will include the purchase price as well as an indication of how you will be paying, as well as the deposit amount that is required. In other words, you will be expected to specify whether you will be obtaining bond financing from a bank, whether it is subject to you selling your current home or if you will be using cash. The seller may want to implement a few small changes to the OTP before signing their acceptance of the offer. Once these changes have been made you, the buyer, will be expected to sign the contract.

  1. The Bond Originator

Once the seller has accepted the offer by signing acceptance of the OTP, the bond originator will then collect all necessary documentation from you as the buyer and apply for financing on your behalf – should you require it. This is the essential function of the bond originator in the process of buying property when a mortgage bond is needed. The bank that awards the financing will pay the bond originator and as such the buyer is not responsible for these costs.

The documents you will require for financing when you earn a salary are:

  • Payslips. Your income will have to be verified according to your bank account.
  • Your last three or six months bank statements should your income be inconsistent.
  • A comprehensive statement of your income and expenses signed by you.
  • A detailed statement of your assets and debts.
  • Your green South African identity book. Foreign applicants will need to provide proof of residence and work permits.
  • Your rental contract in respect of rental income that will be used to determine your affordability evaluation.

Self-employed applicants will need to provide:

  • Financials covering a two year trade period or current management statements.
  • An auditor’s letter confirming your personal income.
  • A projection of cash-flow for the forthcoming year.
  • A detailed statement of your personal assets and debts.
  • Personal as well as business bank statements of the last six to twelve months, depending on the bank to which the application is made.
  • Your IT34 form.
  • The Company, CC or Trust’s legal documentation.
  • Green South African identity documents of all members, directors or trustees.

Part Two will be on the way tomorrow!

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