A handful of reasons to use BetterBond!
Wondering whether it’s really worth using a bond originator? It absolutely is! Here are at least five reasons why:
- You stand a much better chance of bond approval.
- You submit only one application and we’ll do the rest.
- We handle all the negotiations with the banks, including your own, on your behalf.
- We fight hard to get you the best interest rate, which could save you hundreds of thousands over your bond term.
- Our service is completely free.
What are the steps?
As soon as you’re ready to get a bond, let BetterBond take care of it for you and the process could not be simpler. Here are the steps you’ll go through:
#1
Submit your application. You’ll have your very own BetterBond home loan consultant who’ll advise you on the documents required for your home loan application. We will submit to multiple banks on your behalf, including your own. It’s a good idea to keep a copy of all your documents in a single place – you could start a “dream home” folder!
#2
Bank offers. We will come back to you with offers from the banks and you’ll be able to choose the one best suited to your needs.
#3
Approval in principle. After your application is assessed, most banks will provide you with an approval in principle, subject to the valuation of the property.
#4
Property valuation. The bank will assess the property to confirm the value in order to make their final decision on your application.
#5
Loan approval. If your home loan is approved, you will receive a quotation stating the amount that’s been approved, the interest rate you’ve been given, and the terms and conditions of your bond.
#6
Bond registration. Once you have accepted and signed the quote, the loan will be formally granted by the bank and they will instruct the bond attorneys to register your bond. The registration process can take up to four months.
#7
Insurance. As a homeowner, you should ensure that you are comprehensively insured. Our in-house insurance providers, BetterSure, can assist you with your insurance requirements at competitive rates. You’re welcome to discuss this with your home loan consultant.
That’s it! You’ve got the bond, you’ve got the finance, and soon your first home will be yours. You can start planning your move and think about decorating your new place!
Who does what?
There are quite a few role-players in the home-buying process. Here are some of the key people you’ll encounter along the way:
- Bond attorneys. They register the bond and property in your name. Depending on which bank grants your home loan, either BetterBond or the bank will appoint an attorney from a panel of preferred attorneys.
- Transferring attorneys. They handle the transfer of the property from the seller’s name to yours. They are usually appointed by the seller, or if they don’t have an attorney, one can be appointed by the estate agent. They do not have to be on the bank’s preferred panel of attorneys.
- Cancellation attorneys. They handle the cancellation of the existing bond if the seller has a bond over the property. They’re appointed by the bank where the bond was held and will also be selected from a panel of preferred attorneys. If you buy into a brand-new development, there is no prior owner, so this step does not apply.
- Deeds Office. They will register the property and bond in your name and issue the Title Deed. You will receive a copy of the Title Deed and the original will be held for safekeeping by the bank that grants your bond.
- Municipality or local authority. They will issue the Rates Clearance Certificate for the property.
- SARS. They receive the transfer duty, and will issue the Tax Clearance Certificate. (As of February 2020, there is no transfer duty payable on properties priced up to R1 million. Also see TRANSFER DUTY below and remember there is a difference between transfer duty and transfer costs.)
What’s the difference? Transfer duty vs Transfer costs
- Transfer DUTY = property tax payable to SARS on properties costing more than R1 million.
- Transfer COSTS = legal fees payable to the attorneys who transfer the property into your name.
What are the costs?
Apart from the monthly repayments of your bond, related to the purchase price of the property, there are other costs that come with buying a home. Be aware of these so that you can save up and budget for it in good time. Here’s a list of the main ones you’ll need to cover:
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Transfer duty. Based on the value of the property and payable to SARS every time a property changes ownership. As of February 2020, there is no transfer duty on properties up to R1 million, and if you buy for more than R1 million you pay no transfer duty on the first R1 million. If you’re buying into a brand-new development, there’s no transfer duty either, but VAT is included in the purchase price.
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Transfer costs. Payable to the attorneys who transfer the property into your name. Calculated using a sliding scale that is based on the purchase price. Transfer duty and transfer fees are not the same, so the R1 million transfer duty exemption does not apply to transfer fees.
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Bond registration fees. Payable to the bond attorneys who register your bond at the Deeds Office. Based on recommended tariffs, but could differ from one law firm to another, and depends on your home loan amount.
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Bond initiation fees. Payable to the bank for processing your home loan application. Most banks charge a flat rate of R6 037.50, but make sure you get the final amount from the bank that grants your home loan. You have the option to include it in your bond, or to pay it to the bond attorneys, along with your bond registration fees.
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Ongoing costs. You can request an estimate of the running costs of the property from the seller or estate agent. As owner, your responsibilities would include municipal rates and taxes, utilities like water and electricity, and nowadays often fibre. In a sectional title property, there will be a levy for services like security and landscaping in common areas, and from time to time there could be a special levy, for example if the exterior of the building needs to be painted or repaired. These all add up so make sure you take them into account.
What is a 105% bond?
This is a home loan that includes bond costs and does not require a deposit. The qualifying criteria varies between banks and your BetterBond home loan consultant will be able to explain this to you in detail. A 105% bond can be a big boost to first-home buyers because it covers the full purchase price, plus up to 5% more, to help with bond and transfer fees. You pay it off over your bond term, which is typically 20 years.
Is bond origination really free?
Yes! When we say our services don’t cost you a cent – we mean it! By working with a bond originator, you signal to the banks that they’re competing for your business. Banks are businesses just like any other and they want to increase the numbers of customers on their books. So, by offering you a competitive interest rate on your home loan, they can sign you up for a bond, which typically runs for 20 years. Fees are exchanged between the bank that grants the home loan and the bond originator – they gain a long-term customer and you get some serious savings… everybody wins.
It is not true that the banks charge higher interest rates to cover bond origination costs – in fact, the opposite is true, as they charge lower rates, based on the fact that it’s less work for them if your application comes in via an originator like BetterBond!
When you go and sign
Big day! You’re going to sign your bond and registration docs at the attorneys! You’ll need to take along a set of original documents, including your ID, proof of income, proof of address, etc. depending on your type of application. Check with your home loan consultant beforehand, to make sure you take all the relevant docs along.
Know the lingo!
We’ve compiled a handy list for you, of all the legal jargon, to help you navigate your way through this like a pro, which you can access on our website.