Your first property purchase
There are many things in life that may seem extremely daunting. For many first-time home buyers, the entire transfer process is often unfamiliar ground that they traverse with much precaution. However, what many of these buyers don't realise is that the largest part of the transfer process is handled by other professionals: the bond originator or banker that attend to the bond approval, the various attorneys involved in the process, those working in the Deeds Office, etc.
With this handy guide, you have all the basic information to make your first property purchase a lot less intimidating.
Credit where credit's due
There are very few individuals who can purchase a property in cash, and many homeowners will need to take out substantial bonds in order to purchase a property. Depending on the circumstances at hand, bonds of up to 100% (and sometimes even slightly more) of the purchase price of the property are taken up by buyers. A good credit score and affordability goes a long way to secure financing for such a large purchase.
Higher deposit, lower total cost
The higher the deposit you put down on a prsoperty, the less you'll end up paying in interest over the lifetime of your loan. Shorter loan periods will also lead to lower overall costs. This is why it is extremely important to calculate a comprehensive budget for your first property purchase to ensure you make a good financial decision too.
Bond pre-approval
It is always advisable to get a good indication from your bond originator or bank in terms of how much you would most likely qualify for in terms of a bond. Some bond originators like www.mymortgage.co.za can do a very detailed pre-approval for their clients. This can be highly advantageous when the estate agent presents your offer to a potential seller, as it indicates a high probability of being successful in securing the necessary finance.
Transfer costs
Apart from the actual purchase price of the property, you must keep in mind that there are various other fees involved in the transfer process: Including bond registration costs, transfer duty on properties over R1 000 000 in value - which incrementally gets larger as the transfer value grows, as well as the conveyancer's fees, among others. This means that you essentially need to keep out an extra amount of money and factor it into your purchase. You can use Meridian Realty's online calculator to get an accurate idea of the bond and transfer costs (https://www.meridianrealty.co.za/calculators/#bond-transfer-costs).
Signing the Offer to Purchase (OTP)
The OTP is the first legal step of the transfer process - it details all the requirements to be met for the sale to go ahead. It is important to inspect the offer closely before signing, as any amendments to the offer to purchase may only be made if it is in writing and signed by both the Seller and the Purchaser.
Let the conveyancing commence
In most cases, it will be the seller who appoints the conveyancing attorney who receives the OTP and starts the property transfer (conveyancing) process.
The paperwork
Your transferring attorney will do most of the paperwork throughout your first property purchase, but there are a few documents that will be required throughout the process - be sure to understand what these are and how they will affect the transfer process:
And that's it. Meridian Realty is your partner throughout the process and we have your best interest at heart throughout the process.
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www.meridianrealty.co.za Thinking about becoming a part of the Meridian family? Find out how to become an iAgent.
www.meridianiagent.co.za
This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your adviser for specific and detailed advice. Errors and omissions excepted (E&OE)
With this handy guide, you have all the basic information to make your first property purchase a lot less intimidating.
Credit where credit's due
There are very few individuals who can purchase a property in cash, and many homeowners will need to take out substantial bonds in order to purchase a property. Depending on the circumstances at hand, bonds of up to 100% (and sometimes even slightly more) of the purchase price of the property are taken up by buyers. A good credit score and affordability goes a long way to secure financing for such a large purchase.
Higher deposit, lower total cost
The higher the deposit you put down on a prsoperty, the less you'll end up paying in interest over the lifetime of your loan. Shorter loan periods will also lead to lower overall costs. This is why it is extremely important to calculate a comprehensive budget for your first property purchase to ensure you make a good financial decision too.
Bond pre-approval
It is always advisable to get a good indication from your bond originator or bank in terms of how much you would most likely qualify for in terms of a bond. Some bond originators like www.mymortgage.co.za can do a very detailed pre-approval for their clients. This can be highly advantageous when the estate agent presents your offer to a potential seller, as it indicates a high probability of being successful in securing the necessary finance.
Transfer costs
Apart from the actual purchase price of the property, you must keep in mind that there are various other fees involved in the transfer process: Including bond registration costs, transfer duty on properties over R1 000 000 in value - which incrementally gets larger as the transfer value grows, as well as the conveyancer's fees, among others. This means that you essentially need to keep out an extra amount of money and factor it into your purchase. You can use Meridian Realty's online calculator to get an accurate idea of the bond and transfer costs (https://www.meridianrealty.co.za/calculators/#bond-transfer-costs).
Signing the Offer to Purchase (OTP)
The OTP is the first legal step of the transfer process - it details all the requirements to be met for the sale to go ahead. It is important to inspect the offer closely before signing, as any amendments to the offer to purchase may only be made if it is in writing and signed by both the Seller and the Purchaser.
Let the conveyancing commence
In most cases, it will be the seller who appoints the conveyancing attorney who receives the OTP and starts the property transfer (conveyancing) process.
The paperwork
Your transferring attorney will do most of the paperwork throughout your first property purchase, but there are a few documents that will be required throughout the process - be sure to understand what these are and how they will affect the transfer process:
- FICA documents
These are the basic identification documents that are required to protect the transaction against fraudulent transfer activity. - Bond Settlement Figures and Guarantees
The purchasing price can be covered in one of two ways - you could either pay the full purchase price or (as is the case in the overwhelming majority of first-time purchases) you will have to reach a bond agreement with the bank who will then provide a guarantee to the bond attorney. - Transfer documents
These all declare the intended change of ownership and reflect the transfer of property from seller to buyer. - Rates Clearance Certificate and Levy Clearance Certificate
The seller has a legal responsibility to pay all outstanding amounts before the property can be officially transferred, and only if there is no outstanding debt, can the certificate be issued. - Compliance Certificates
There are various other compliance certificates that confirm the state of the property to ensure that the purchaser has a very clear and factual idea of the condition of the property. Depending on the situation at hand these may include electrical, electrical fence system, plumbing, gas, and beetle infestation clearance certificates.
And that's it. Meridian Realty is your partner throughout the process and we have your best interest at heart throughout the process.
Facebook | Instagram | Twitter | YouTube | LinkedIn
www.meridianrealty.co.za Thinking about becoming a part of the Meridian family? Find out how to become an iAgent.
www.meridianiagent.co.za
This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your adviser for specific and detailed advice. Errors and omissions excepted (E&OE)
26 Jan 2022
Author Meridian Realty