We asked our local Standard bank to help us answer some of the most frequently asked mortgage questions. They gave us all the information you will need to get started.
What documents are essential for home loan applications?
- South African ID
- Proof of residence
- Latest payslip
- Six months’ payslips (if commission or overtime is to be taking into account)
- Three months’ bank statements reflecting last three salary deposits
- A signed statement of income and expenditure
- A copy of the Offer to Purchase
What is an Offer to Purchase?
An Offer to Purchase is a document containing all the information about the individuals involved, the property being sold, details of the sale, any specific conditions and also the price offered and accepted.
If under debt review, can I apply for a mortgage?
The National Credit Act prohibits any further lending while a client is under debt review.
How long does it take for a home loan to be approved?
Once all the documents are received and the necessary credit checks and the property valuation are completed, the process can take anything from three to five working days.
Do I need a deposit when applying for a home loan?
There is no legally binding stipulation that you have to pay a deposit. However, paying a deposit is seen as an act of goodwill and to show commitment should the seller and estate agent request this. They could decide on any amount from a few thousand rands to 20% of the property price. Standard Bank would consider granting a loan at 100%, that is, with no deposit.
Will the bank finance a repossessed house?
In short, yes. In many instances, when the property is financed by the institution where the existing bond is held, it may accept a favourable offer.
How much do I qualify for?
Most banks have home loan calculators that should give you an indication of what you will qualify for, so use the calculator. Your bond repayment cannot exceed 30% of your monthly salary. Since the introduction of the National Credit Act, the financial institution has to ensure that the applicants have sufficient surplus to service the monthly instalment. This is of paramount importance and should be a guide in the calculation of the qualification amount.
Should I take out insurance for my home loan?
When you apply for a home loan you will find that homeowners insurance is mandatory as it covers your property against loss and damage. This is also known as Homeowners Comprehensive Insurance.
Life insurance, on the other hand, is designed to pay out a cash lump sum in the event of your death, which your beneficiaries can use to continue making monthly home loan repayments, or they may decide to pay off the loan completely. The bank offers a number of life insurance options, from a home loan protection plan to life cover to settle the bond in the event of death to the more traditional life cover, which protects your dependants should anything happen to you.
Do I pay to go through a mortgage originator?
The banks pay the originator a finder’s fee for a loan that is granted and accepted by the borrower, so the borrower does not have to pay any costs in this regard. The bank will pay the mortgage originator an introductory commission on any home loan placed with the bank when the bond registers. There is no cost for the client.
What fees can I expect to pay?
The following diagram illustrates the costs for different purchase prices:
|Purchase price/Bond amount||R900 000||R1 500 000||R3 000 000|
|Transfer duty||R 0.00||R25 500||R163 000|
|Transfer attorney fees*||R20 850||R26 550||R38 750|
|Bond registration fees*||R20 850||R26 550||R38 950|
|Total costs||R41 700||R78 600||R240 700|
What is the difference between transfer duty, transfer attorney fees and bond registration fees?
Transfer duty is a tax on the purchase of properties. It is payable where the purchase price exceeds R900 000 and is charged on the value of a property where ownership is transferred from one party to another.
Transfer attorney fees are payable to the attorney who is appointed by the seller to transfer the property to the name of the new owner.
Bond registration fees are payable to the attorney appointed by the bank to register the bond at the Deeds Office to secure the loan.
Source: Tamlynn Almacin, Stellenbosch Branch Manager, Standard Bank