Agreement of Sale
A written contract between seller and buyer that records the terms and conditions of the sale of a property, often referred to as a deed of sale.
Bond
Or Mortgage Loan: A loan made to the owner of a property where the property is the security for the loan. The loan amount or a greater amount is registered in the Deeds Office against the title deed of the property.
Bond calculators
Also referred to as home loan calculators, bond calculators include bond repayment calculators and similar home loan affordability calculation tools.
Bond Protection
Life assurance on the life of the borrower to cover the amount owing on the bond.
Bridging Finance
Short-term loan to cover the time until a person receives funds anticipated, usually from a transaction in progress, to conclude another transaction.
Building Loan
This is a loan one would take to build a house
Capital Gains Tax
Taxpayers, including individuals, trusts, companies and corporations, will be taxed on the profit they make when they sell an asset or property of capital nature, usually where there is a change in ownership. This is basically a tax on the resale of profits, but does not apply to your primary residence.
Capped rate bonds
A capped rate bond refers to the type of home loan where the interest rate at which the loan is issued is fixed for a period of time. Fixed rate bonds' interest repayments therefore won't fluctuate if the prime lending rate is adjusted.
Cession
The transfer of rights to another e.g. the transfer of rights of ownership.
Cooling Off Period
This is a clause included in an offer to purchase or a sale agreement. A buyer may be entitled to revoke his/her offer or terminate the sale within the contractual specified days "cooling off" period.
Consolidation of Debt
The replacement of multiple loans with a single loan, to achieve a lower monthly payment. This may entail replacing more expensive finance (e.g. hire purchase, bank overdraft, credit card) with cheaper and longer term finance - such as a further loan from a mortgage bond.
Conveyancer
An attorney (lawyer) qualified to prepare documents and attend to the transfer of a fixed property and the registration of mortgage loans.
Costs (or cover) Clause
Provision in a mortgage loan document securing an amount over and above the money lent, to cover potential costs such as: penalties, legal fees, costs of attachment, interest, etc.
Deed
Legal term for a formal legal document that is signed, witnessed and delivered to effect a conveyance or transfer of property or to create a legal obligation or contract.
Deed of Sale
An Agreement of Sale: A written contract between seller and buyer that records the terms and conditions of the sale of a property.
Deeds Office
The government department where rights and interests in immovable property are registered. These are regionally located.
Deposit
The amount of money a customer has available to contribute towards the purchase of the property.
Domicilium Citandi et Executandi
A physical address where the delivery of legal notices will be accepted by a party to a written agreement.
Employment Types
A person who is employed by a business enterprise, receives a monthly salary, but has no significant ownership of the enterprise.
An material shareholder or principal of a Company, a CC or a Sole Proprietor. Proof of income would be in the form of a letter from an accountant/ bookkeeper stating monthly take-home earnings, and supported by bank statements.
A housing allowance forms part of the remuneration package & the employer deducts bond repayments directly off the salaries of employees. These are usually offered by government employers, municipalities and the like.
Equity
The amount by which the value of a bonded property exceeds the amount owing on the loan.
The amount by which the amount owing on a bonded property exceeds the value of the property.
Fixed Rate Bonds
The bond repayments on a fixed rate bond is not affected by interest rate fluctuations for as long as the bond rate is fixed, making them attractive to home buyers who wish to fix their overheads.
Guarantee
A document which guarantees the payment of a certain amount on the occurrence of a certain event, e.g. A bank guarantee in favour of a conveyancer, payable on the registration of transfer of a property into the name of a lender.
Household Contents Insurance
Insurance against loss or damage to the contents of a residence e.g. Furniture, appliances, clothing, etc.
HOC
The Home Owners Comprehensive Insurance covers loss or damage to immovable property.
Initiation Fee
This is a once off payment levied on new loans, and which covers the administrative costs associated with providing your home loan.
Installment Amount
This is the basic monthly amount paid for your home loan. The installment payment typically will comprise the monthly interest on the loan as well as an element of capital repayment, together with any monthly costs and insurance premiums.
Interim Interest Provision
(Applies to "switch bonds" only)
After your bond has been approved, your new bank applies for cancellation figures from your current lender. These figures are deduced by adding the loan amount outstanding + 3 month’s interest. We call this "interim interest". This interim provision is required by banks in order to safeguard themselves against a shortfall in the amount outstanding on registration with SA Home Loans. On registration, we pay the full cancellation fees to your lender, who then refunds you with the interim interest in full, provided your account has been conducted normally.
Interest rate
The prime interest rate is the standard rate at which financial institutions such as banks issue loans such as bonds. If a bond is interest rate linked, the premiums will increase or decrease depending on whether the interest rate is adjusted.
JIBAR
The Johannesburg Interbank Agreed Rate is a 3 month deposit rate. It is a South African money market rate which is determined by a number of local and international banks, and updated on a daily basis. The rate achieved is in yield form and is quoted as the 3 Month JIBAR rate. This rate is published each day by 11h00 on Reuters on the SAFEX page.
Loan pre-approval
The process of home loan pre approval gives prospective home buyers the assurance that they can afford to buy a property within a pre-approved price bracket. Pre approved home loans can give home buyers a relative competitive advantage, as offers made with pre-approval are favoured over purchase offers made subject to bond approval.
Loan to Value (LTV)
The value of the mortgage loan, or the amount that the borrower wishes to borrow, expressed as a percentage of the market value of the property, or the estimated value of the property.
Market Value
The amount, that a willing and financially able buyer would pay, to a willing and able seller, provided that the property had been effectively exposed to the market for a reasonable period of time.
Mortgage Loan
A loan made to the owner of a property where the property is the security for the loan. The mortgage bond is registered in the Deeds Office against the title deed of the property.
Mortgagee
Lender (creditor), usually a bank, who advances or lends money on the security of a property purchased.
Mortgagor
Borrower (debtor) who borrows from a lender by mortgaging his property to the lender as security.
NCA
The National Credit Act is a piece of legislation that governs the provision of credit related service, and how much you are able to borrow. As a rule of thumb, prospective home owners will not be able to qualify to spend more than 30% of their net salary or income on home loan repayments.
NPV
The Net Present Value (NPV) is the value of a future sum of money which is calculated and expressed in today’s terms.
Non-liquid Assets
Assets that cannot be easily converted into money.
No deposit bonds
Often sought after by first time buyers or prospective buyers who don't have large amounts of capital towards a deposit and transfer fees, the no deposit bond is also sometimes referred to as a 100%, as the deposit is financed as well.
Rate adjustment
The prime lending rate is influenced by a range of macro economic factors, which leads to upward or downward adjustments over time. A rate hike will increase the home loan repayments for a variable rate loan, while a reduction will reduce it. Rate adjustments primarily affect the interest repayments, not the capital repayments, yet rate hikes typically increase the amount of time it takes to pay off a home loan.
Securitisation
The packaging of home loans in an insolvency remote entity, and the simultaneous issue of financial securities to investors at a lower interest rate than would be payable if a bank were providing funds. The risk to investors is negligible and therefore they are willing to accept a lower return on their investment.
Service Fee
The monthly fee which may be levied on your home loan in respect of routine administration cost of maintaining your loan.
Standard home loans
Used to purchase ordinary residential homes such as flats, duplexes or houses, rather than commercial property.
Surety
Signing surety for a loan means taking the legal responsibility of repaying a loan or meeting a similar financial commitment within a pre-determined time frame.
Suspensive Condition
A clause in an agreement of sale whereby the validity of the contract is made subject to the occurrence (or non-occurrence) of a future event, e.g. the granting of a bond, of a certain amount, before a certain date.
Switch Bond
A bond that you had previously with one financial institution but then changed to another financial institution.
Term
The period (usually expressed in months) over which the borrower intends to repay the mortgage bond. This is typically 20 years (240 months). The monthly instalment paid is therefore a function of the amount borrowed, the interest rate and the repayment term.
Title Deed
Legal document registered at a Deeds office, as evidence (proof) of ownership of a property by the registered home owner.
Trust
A financial instrument that can be used to house the ownership rights of a property asset. One example is a family trust, where the beneficiaries of the trust are the nominated family members.
