Process when purchasing property

How to obtain a bond…

Purchasing property plus applying for a bond can be a very nerve-racking and an extensive procedure. This article will help you better understand this process.

First of all, you need to understand the term ‘bond’. A bond is generally known as a “mortgage” in many countries. In South Africa a bond refers to a home loan. A bond is simply a loan made by a third party, to general a bank, for the potential property owner.

Most people are unable to buy property out of their own savings, so they require a loan in order to finance the purchase. A request or application is made to a bank to gain an initial agreement to the loan and obtain an interest rate. Once the individual is pleased with the rate, the preferred bank is informed and the verification process of income and the valuation of the property take place. If all the banks requirements are met, the loan  is granted.

It is important to remember that in order to qualify for a home loan you have to:

–  Be over 21 years of age
–  Have to be permanently employed
–  Have no judgments or defaults on your credit profile
–  Earn above the minimum salary requirement as set out by your chosen Bank

The following important documents need to be provided when you apply for a bond:

– Proof of income
– Copy of your South African ID or passport
– Copy of signed Offer to Purchase
– Proof of current residential address
– Official salary slip or stamped bank statement (either option needs to show history for the last 3 months)

Once your preferred bank has received all the relevant documents, the approval process begins. The bank will support the loan subject to a property valuation, and subject to meeting all the credit plus FICA (Financial Intelligence Centre Act) requirements. This valuation is done to ensure the bank that the property being purchased reflects its true value. From here, the application usually takes between three to seven working days.

The bank can now officially grant the loan. Once accepted and signed off by the individual, it’s off to the attorneys for final signature and transfer of the property into the individual’s name.

We trust that this article will assist you in your quest. Good look!