Jul 07 2017



Tags: home mortgage  mortgage bond  home loan  buying a home  buying house 

A Buyer's Guide to Home Ownership
A Title Deed is the official document that proves you are the legal owner of a property or land.

Many first-time home buyers do not fully understand the process of finding their dream home. From the outset, it may appear that it will take forever! Even once you have found the perfect home, you still need to ensure that you qualify for a mortgage bond that will cover the total re-payments, interest and all the additional expenses that are involved.

Once you have secured a home loan and found your perfect home, your next step will be to put in an offer to purchase. During this time you will encounter many legal terms and jargon talk along the way. You will need to fully understand these terms and what they pertain to, because they will be laid out in the conditions of the contract and also the title deed, which you will need to agree to and sign.

By familiarizing yourself with the property terms and the basic steps to home ownership, you should hopefully be more confident and prepared to aspire to obtaining your dream home!

Here are the basic steps a buyer should follow.

1. Determining Your Monthly Repayments

As a buyer, you should first determine the monthly mortgage re-payment amount that you can afford and are comfortable repaying every month. It is a good idea to know how much you can afford to borrow and how long it will take you to pay off the loan, including all the additional costs and the interest.

When you apply for a mortgage bond, you will be asked to specify your total gross income, including all your monthly expenses. This will determine the monthly repayments you will be able to make on the bond and the total amount the mortgagee (lender) is willing to lend you.

Dalena Properties has an excellent bond calculator that you can use to determine your monthly re-payments, including the number of months it will take to pay off your home bond.

2. Mortgage Bond vs. Home Loan

A Mortgage Bond and Home Loan are two different terms that are used inter-alia with one another, but they essentially mean the same thing.

A Mortgage Bond is an agreement that is setup between the lender (for example: a home financial provider or a bank) and the borrower (you). The property acts as the surety of the loan in the event you cannot pay back the loan.

3. Apply for a Home Mortgage Loan

There are numerous home loan lenders available, including most banks. You should always remember to choose a mortgage lender that is registered with the National Credit Act. Securing a mortgage loan will depend of various factors, but most importantly you will be evaluated on:

1. Your current financial position
2. Your current credit status
3. The loan amount that you are applying for

Each application is evaluated separately on an individual basis, but you can increase your chances of securing a home bond by:

1. Having an excellent credit record and credit history
2. Paying off as much creditors debt before you apply
3. Saving up a significant deposit to act as a down-payment on your loan

Did you know that a substantial deposit on your home loan will not only decrease your total mortgage debt, but will also reduce the total interest amount owed to the lender? You will also be seen as a lower risk by mortgage lenders.

4. Finding the Home of Your Dreams

Now that all the groundwork has been covered and your home loan is secured, you can begin your search for your perfect home! Once you have found the home of your choice, there is much to be done before putting in an offer to purchase.

We recommend visiting the property on more than one occasion and at different times to determine what it will be like living there, what your neighbors are like and the amount of traffic congestion in the area at various times of the day. This is not always apparent on the first visit.

It is highly advisable to work with a reputable estate agent, as they will be able to give you sound advice and also communicate between you and the seller. All your questions pertaining to the property should be clearly answered before you make an offer to purchase.

5. The Offer To Purchase

Your estate agent will now prepare the required documentation, including the Offer To Purchase document which will contain the following:

1. The terms and conditions of the purchase
2. The purchase price
3. The terms of payment
4. Occupational date
5. Occupational rent
6. A Cooling-Off period

The Occupational Rent clause refers to a rental fee should the seller wish to stay on the property after the sale has completed, or longer than the occupational date.

A Cooling-Off Period is usually included to allow you (the buyer) up to 7 days to terminate the offer to purchase, should you decide to change your mind.

6. Final Steps to Owning Your Dream Home

Once the seller has accepted your offer to purchase and your home loan is secured, the final process will begin by transferring the property into your name. This process is handled by a 'property conveyancer' attorney who will prepare all the legal documentation of the mortgage bond which will need to be signed, including the registration of the mortgage bond which is done at the Deeds Office.

The seller will usually also need to provide you with an Electrical Clearance Certificate for the property and a Pest Free Certificate may also be required for older properties.

Once this process is completed, the property should now be fully transferred into your name, stating that you now are the proud new owner of your new home - Congratulations!

Related Article: What you should know before signing a lease agreement.


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