Home-buyers’ guide
Information for a stress-free financial decision
Home buyers’ guide
Contents
1 Understanding how a home loan works
2 Buying a home
3 Building your own home
4 How do I classify my property?
5 How do I classify my home loan?
6 Insurance
7 Costs involved when buying a home
8 Questions to ask the registering attorney
9 Frequently asked questions
10 Explaining jargon
11 Useful contacts
12 Code of banking practice
3
1 Understanding how a home loan works
Before you apply for finance to buy residential property, it is important to understand the basics of a home
loan. In a nutshell:
• A home loan is a credit transaction granted by us to you to buy a residential property.
• Your home loan is repayable in monthly instalments over a specific period (term).
• Your home loan attracts interest over the term of the loan. There are also initiation and service fees.
• We will register a mortgage bond over the property (as security for the loan) until your home loan is
settled in full and your account is closed.
A home loan is calculated using a financial tool called an Amortisation Schedule. This means that the principal
debt is paid over a specific period with interest accumulating each month. The monthly instalment includes a
portion of the principal debt (capital) and interest accrued and is calculated in such a way so as to pay off the
principal debt within the agreed period.
At the start of the home loan term, the interest portion of the instalment is much higher than the capital
portion so your balance does not reduce significantly in the first couple of years. However, as the loan
amortises (is paid off), the capital portion increases while the interest portion decreases keeping the
instalment constant.* An example of a basic amortisation schedule is shown below (excluding any fees,
insurance premiums, rate changes or prepayments):
Loan amount R500 000 Period 240 months
Interest rate (per annum) 11% Payment R5 387.94
Month Scheduled payment Interest portion Capital portion Balance outstanding
1 R5 387,94 R4 583,33 R804,61 R499 422,39
2 R5 387,94 R4 578,04 R809,90 R498 839,49
3 R5 387,94 R4 572,70 R815,25 R498 251,24
4 R5 387,94 R4 567,30 R820,64 R497 657,60
5 R5 387,94 R4 561,86 R826,08 R497 058,52
6 R5 387,94 R4 556,37 R831,57 R496 453,95
7 R5 387,94 R4 550,83 R837,11 R495 843,84
8 R5 387,94 R4 545,24 R842,71 R495 228,13
9 R5 387,94 R4 539,59 R848,35 R494 606,78
10 R5 387,94 R4 533,90 R854,05 R493 979,73
x
232 R5 387,94 R406,90 R4 981,04 R39 635,18
233 R5 387,94 R363,32 R5 024,62 R34 837,56
234 R5 387,94 R319,34 R5 068,60 R29 995,96
235 R5 387,94 R274,96 R5 112,98 R25 109,98
236 R5 387,94 R230,17 R5 157,77 R20 179,22
237 R5 387,94 R184,98 R5 202,97 R15 203,25
238 R5 387,94 R139,36 R5 248,58 R10 181,67
239 R5 387,94 R93,33 R5 294,61 R5 114,06
240 R5 387,94 R46,88 R5 341,06 R0,00
*An instalment is calculated using the home loan base rate as a reference rate and this rate is subject to
change from time to time which will impact the instalment amount.
5
2 Buying a home afford, you need to determine what you are looking
for in a home. Decide what kind of house suits your
You’ve made the decision to buy a home, now what?
needs (for example townhouse, cluster or single
To help you understand what lies ahead, who does
stand house) and how many rooms you will need.
what and when, we’ve put together information and
steps that you can follow to achieve your goal. Step 3: Sign offer to purchase
The key steps of buying a home Once you have decided on the property you would
like to buy, you will need to complete an offer to
Step 1: How much can I afford?
purchase form that will normally be supplied by the
The first step is to determine how much you can estate agent attending to the property sale. This
afford to pay every month. This is not only on your document is sometimes known as an agreement
monthly home loan instalment, but also includes of sale or deed of sale. Basically, it is a written
items such as insurance (both for the building and agreement stating the terms and conditions under
the contents of your home), assurance (a life policy which you agree to the buying and selling of the
to cover the loan should anything happen to you), property.
rates and taxes, and water and lights.
Step 4: Seller accepts offer
As a rule, your monthly home loan instalment
The offer to purchase has to be negotiated. It
should not be more than 30% of your gross monthly
is advisable to note which fixtures and fittings
salary. Your gross monthly salary must exceed
form part of the sale. All the permanent fixtures
your monthly expenses by at least your monthly
and fittings such as light fittings, carpets, tiles,
repayment amount. For example, if your gross
curtain rails and pelmets, and built-in cupboards,
monthly income is R15 000, your monthly expenses
are included in the sale unless the buyer and seller
are R10 000 and your new home loan repayment
agree otherwise. Any movable items included in
is R4 000, your loan will be approved (R15 000 –
the sale must be negotiated between you and the
R10 000 = R5 000, which is greater than R4 000).
seller. Once you have negotiated the offer, the
If your gross monthly income is R15 000, your
seller must accept the offer to purchase.
expenses are R10 000 and your monthly repayment
is R10 000 you will not qualify for a home loan Step 5: Apply for a home loan
(R15 000 – R10 000 = R5 000, which is less than
You will need to apply for a home loan and/or
your monthly repayment amount of R10 000).
redeem the pledge and provide us with all the
You also need to be aware of additional legal necessary supporting documents.
expenses, such as transfer, registration and bank
Documents we require for all applicants:
administration costs such as initiation fees and
service fees. • Proof of income (payslip and three months’ bank
statements)
A home loan pledge will assist you in determining
the maximum amount we are prepared to lend • Certified copy of South African identity
you without actually signing an offer to purchase document or passport
for a property. The pledge is issued subject to
our normal credit approval criteria and is valid for • Spouse’s identity or passport number, if you are
three months from the date of issue as long as married in community of property
your financial situation does not change. To apply
• Proof of current residential address (municipal
for a pledge, visit your nearest branch or apply via
account, Telkom account or valid TV licence)
www.standardbank.co.za
Additional documents may be required depending
Step 2: House-hunting on the type of loan you apply for. We will contact
Once you have established how much you can you if we require any additional documents.
6
You will need to provide a
copy of the offer to purchase
that you and the seller signed before
the approval process is finalised.
To apply for a home loan visit any branch, call
0860 500 000 or visit www.standardbank.co.za
receive an
Step 6: Requirements will be confirmed SMS confirming
Once we have the offer to purchase and other that your home loan has been granted.
supporting documents, we will do a final credit
Step 10: Registration attorney instructed to
check, including your ability to repay your
register the bond
instalment each month.
We will appoint a registration attorney that will
Step 7: A property assessment is completed contact you to arrange for you to sign the credit
This is to determine whether the property provides agreement and mortgage bond agreement. Once
sufficient security value for the home loan, and to you are at the registering attorney’s office, they will
indicate a structural insurance amount. take you through the quotation/cost of credit and
explain important details regarding your home loan.
Step 8: A decision is made
If you require time to consider the home loan, you
After considering your income, credit standing and have five (5) business days to do so.
property assessment; we will make a final decision
on your loan application. If there are any inaccuracies on the credit
agreement, you can instruct the attorney to
Step 9: Quotation/cost of credit send an instruction to us to amend the details.
We will send you a quotation/cost of credit This means that you will have to go back to the
notifying you that your loan has been approved attorney’s office once the amendment is accepted
with all related charges and fees. You will also by us and the attorney is instructed to proceed.
7
Step 11: You sign the necessary documents at 3 Building my home
the attorney’s office and pay the relevant costs
Building a home is slightly more complicated than
If you accept the home loan, you must sign all the buying a ready-built property. So what can I expect?
legal documents (see FAQ section) pertaining to
your loan. The key steps of building a home
The transfer and bond registration fees must be Step 1: How much can I afford
paid in full to the attorney before the bond is If you decide to build a house, you still need to
registered in your name at the Deeds Office. If you determine how much you can afford. This process
are a first-time home buyer, you may be able to is the same as for buying a house.
include the costs in your loan. Speak to one of our
consultants regarding our JumpStart home loan. Step 2: Determine if you want to build a full
title or in a complex as part of a development
Step 12: Documents sent to Deeds Office for
If you have bought vacant land or have financed
registration in your name
vacant land, you can build on the land using an
Once all fees are paid in full, the documents are independent contractor. You can also buy the
sent to the Deeds Office. vacant land and the building contract at the same
time, called a building loan package. In other
Step 13: Registration of the mortgage bond at
instances, you may prefer building off plan in
the Deeds Office
a complex where the developer currently owns
Registration attorney confirms registration the land. In this instance, you will also apply for a
building loan package, which includes the cost of
Seller’s bond is cancelled and settled (if applicable)
the land and the building of the structure.
Funds paid to relevant parties
Step 3: Choosing a builder
The amount you owe will be shown on your home There are numerous requirements that we insist
loan account, including any initiation fee. on in terms of the quality of the builder. It is thus
in your and our best interest to ensure that you
Step 14: Your first instalment is due
employ a reputable builder. Check the builder’s
Your first instalment will be due between 30 reputation by inspecting homes built by them and
and 45 days after registration, depending on the speak to the owners of these homes.
instalment date you indicated on the debit order
instruction signed at the registering attorney. A Specifically, you need to ensure that the builder
debit order is mandatory on all home loans. is registered with the National House Builder
Registration Council (NHBRC). You also need to
You will receive a statement twice a year. Should ensure that the builder has a Contractor’s All-Risk
we grant you an AccessBond facility we will send policy to cover any insured contingency occurring
you a statement at the end of the month following during the building process.
any debit transactions on the account during that
month. It is also in your best interest to ensure that the
builder is on our panel of approved builders. If the
Step 15: Attorney sends title deed and mortgage builder is not on our panel, you will need to obtain
bond documents to us for safekeeping the necessary information from the builder:
We will store all relevant credit agreement, mortgage
• Three references of properties built
bond agreements and title deeds on your behalf.
• List of other financial institutions who previously
provided bond finance
8
• List of at least three trade creditors Step 6: Requirements will be confirmed
• Bank account details Once we have received the supporting documents,
we will do a final credit check, including your ability
• Financial statements if more than five units are to repay your instalment each month.
to be built simultaneously.
Step 7: A property assessment is done
Step 4: Sign the building contract and/or offer
This is to determine whether the present market
to purchase
value of the property covers security for the
Once you have decided on the type of home you home loan. Multiple property assessments will be
would like to build and on the builder, you will need conducted as building progresses.
to sign a building contract with the builder and get
provisional building plans drawn up. You may need Step 8: A decision is made
to enter into an offer to purchase for the land. After considering your income, credit standing,
property assessment and building contract, we will
Step 5: Apply for a building loan
make a final decision on your loan application.
You will also need to fill in a home loan application
form and provide us with all the necessary Step 9: Quotation/cost of credit
supporting documents. We will send you a quotation/cost of credit notifying
you that your loan has been approved with all related
Documents we require for all applicants:
charges and fees. You will also receive an SMS
• Proof of income (payslip and three months’ bank confirming that your home loan has been granted.
statements)
You will also be contacted by us to take you
• Certified copy of South African identity through the building loan process.
document or passport
Note that a building loan risk premium will be
• Spouse’s identity or passport number, if you are added to your interest rate during the course
married in community of property of the building and will only be removed once
construction is completed.
• Proof of current residential address (municipal
account, Telkom account or valid TV licence) Step 10: Registration attorney instructed to
register the bond
Supporting documents required:
We will appoint a registration attorney that will
• Building contract contact you to sign the credit agreement and
mortgage bond agreement. Once you are at the
• Provisional plans or working drawings
registering attorney’s office, they will take you
• Schedule of finishes through the quotation/cost of credit and explain
important details regarding your home loan to you.
• Approval of new builder (if the builder is not on
our panel) If you require time to consider the home loan, you
have five (5) business days to do so.
• Proof of builder’s registration with the NHBRC
If there are any inaccuracies on the credit
Additional documents may be required depending agreement, you can instruct the attorney to
on the loan. We will contact you if we require any send an instruction to us to amend the details.
additional documents. This means that you will have to go back to the
To apply for a building loan visit any branch, call attorney’s office once the amendment is accepted
0860 500 000 or visit www.standardbank.co.za by us and the attorney is instructed to proceed.
9
Step 11: You sign the necessary documents at • Municipal approved plan
the attorney’s office, provide the remaining
• Minimum requirements, incorporating Waiver of
documents and pay the relevant costs
Lien (form obtainable from us)
If you accept the home loan, you must sign all the
legal documents (see FAQ section) pertaining to • Engineer’s Certificate (if applicable).
your loan.
We will generate an inspection report and pay
You must provide the registering attorney with the out the first progress payment (usually the funds
following documents before registration of the needed to build the foundations of the property).
mortgage bond:
Your home loan account will be debited with the
• Original NHBRC Enrolment Certificate amount paid out in terms of the progress payment
and interest will begin to accumulate on the amount
• Original authorisation for contractor’s payment and will be debited to your home loan account. It is
(NHBRC form PA002) or provide proof that the in your best interest to service the interest during
NHBRC levy has been paid the building phase to avoid running out of funds
The transfer and bond registration fees must be paid during the building period.
in full to the attorney before the bond is registered
Step 16: Interim progress payments
in your name at the Deeds Office. If you are a
first-time home buyer, you may be able to include As building work progresses, you will need to
the costs in your home loan. Speak to one of our request each progress payment. When the progress
consultants regarding our JumpStart home loans. payment is requested, we will send an assessor to
the property to assess the building work completed
Step 12: Documents sent to Deeds Office for and, if satisfied, will instruct us to make the next
registration in your name progress payment. The assessor may request
Once all fees are paid in full, the documents are additional documents from you.
sent to the Deeds Office. There is a condition in the loan agreement that
stipulates how many payments (or draws) can be
Step 13: Registration of the mortgage bond at
made under the loan.
the Deeds Office
• Registration attorney confirms registration Note that each time a progress payment is made,
the outstanding balance on your home loan account
• Seller’s bond is cancelled and settled (if applicable) will increase and therefore interest charged will
• Initiation fee is debited to your home loan account increase. It is in your best interest to service the
interest during the building phase to avoid running
Step 14: Attorney sends title deed and mortgage out of funds.
bond documents to us for safekeeping
Step 17: Final progress payment
We will store all relevant credit agreements, mortgage
bond agreements and Title Deeds on your behalf. You need to request the final progress payment to
be made. An assessor will be sent to the property to
Step 15: Your first progress payment ensure that the building work is at least 90% complete.
Once the bond is registered, you must request us You will be requested to submit the following
to make the first progress payment. The following documents before the final payment can be made:
documents are required before we make the first • Signed progress payment request
progress payment:
• An occupancy certificate (from the municipality)
• Signed progress payment request
10
• Engineer’s clearance certificate
• Letter of completion/satisfaction (obtainable
from us)
Other documents like pest control, drainage certificate
or waterproofing certificate may be requested.
Note that we will only pay out the difference between
the existing balance on your home loan and the loan
amount originally approved. If you did not service the
interest during the building phase, you may run out
of funds, which will require that you either apply for a
further advance or, if that is not possible, you will have the final progress payment has
to use your own funds to complete the building to our been made, depending on your chosen
satisfaction. For example: debit order date.
• Original loan amount approved = R1 million You will receive a statement twice a year. Should
we grant you an AccessBond facility we will send
• Cumulative progress payments made = R700 000 you a statement at the end of the month following
any debit transactions on the account during that
• Interest accrued during building phase = R100 000
month.
• Balance on account (including interest accrued)
= R800 000
4 How do I classify
my property?
• Final progress payment = R200 000 We subscribe to standard industry definitions of
• R100 000 less than the original loan amount property types. We have compiled this list to assist
applied for you with your loan application.
Step 18: Conversion from building loan to Full title
ordinary home loan Full title describes the transfer of full ownership
Once all required documents are received and rights to the buyer.
the assessor is satisfied, the building loan will be
• House
converted to an ordinary home loan and the final
This is a normal free-standing house with an erf
payment will be made.
number.
At this stage, the building loan risk premium will
• Cluster home
be removed from your account. If you have a
transactional account with us, you can apply for an This is a freehold property, usually in a
AccessBond facility, which is available on ordinary development of similar houses. The group
loans but not building loans. of houses normally has limited access and
controlled security. Each house is individually
You will be required to start paying Homeowner’s owned and no levy is charged, unlike sectional
Comprehensive Insurance (HOC) premiums on the title. However, a residence levy could apply.
completed structure, which will form part of your
monthly instalment. • Residential property used for business
purposes
We will advise you regarding the monthly instalment
Residential property can also be used for
that you will need to start paying. The first
business purposes. This means that you can
instalment will be due between 30 and 45 days after
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conduct a business on a residential property one stand. It could also be two dwelling units
provided that no structural changes are made to attached to one another on one stand. They
the property that would prohibit it from being can be sold separately under sectional title.
converted back to a full residential property and
provided you are entitled to or have permission 5 How do I classify my home loan?
to conduct business from the property as set out We have already discussed loan types: Ordinary,
by the local municipality. A risk premium above building loan and vacant land as well as the property
the qualifying home loan rate is applicable if the types mentioned above. We also offer different home
house is used for business purposes. loan products, features and loan application options.
• Smallholding The following products are offered by us:
A property is classified as a smallholding if it • Business mortgage
is situated within a 150km radius of a built-
A loan in respect of a residential property where
up area, does not exceed 20 hectares, and is
the property will be used for business purposes.
able to be connected to a local authority water
supply or has a borehole. • JumpStart
There must be a dwelling on the property and A home loan offered to first-time home buyers
your main source of income must not be from where gross monthly joint income is more than
farming on the property. If the smallholding is R6 000 in terms of which certain costs can be
larger than 8,56 hectares, you will be charged a included in the loan. You also have the option
risk premium above the qualifying home loan rate. of taking a fixed rate. Up to 108% approved
depending on current loan to value.
Sectional title
• DreamStart
Is separate ownership of units or sections within a
A home loan offered to to you if you earn less than
complex.
R6 000 gross monthly joint income. Compulsory
• Mini subtype house credit life cover is required on this product.
This is a small, sub-divided portion of a large
• Liberator
property, which is suitable for cluster housing
A property portfolio loan facility in which more
developments.
than one property and other secured collateral
• Semi-detached house can be consolidated into a single facility at a
This is two houses attached to one another. preferential rate. Offered to Private Banking and
They may be on separate stands and bonded Private Clients only.
individually as ordinary houses. They can also
• One Account
be on one stand and bonded together under
The One Account is a mostly secured, fully
one bond. The other alternative is that they
transactional single line of credit allowing you
are sold as separate units in a sectional title
to consolidate your home loan, current account
development.
and savings account. It is a wealth creation
• Townhouse or flat product that enables you to better manage your
A townhouse or flat must be in an approved financial affairs. Offered to Prestige, Private
sectional title complex. The complex must Banking and Private Clients only.
contain residential units only.
The following features are offered by us:
• Duet house • AccessBond Link
This is similar to a semi-detached house, but A credit facility that allows you to access any
there are two separate free-standing units on prepayments made into your home loan account
12
(payments made over and above the
monthly instalment). You need to have
a transactional account with us to use this
facility.
• AccessBond Limit
A credit facility that allows you to access amounts
equal to the difference between the balance
outstanding and the original loan amount. Granting
of this option is at our discretion. You need to have
a transactional account with us to use this facility.
• Fixed rate
This is an option whereby your interest rate is fixed
• Further advance
for a period of 12, 18, 24 or 36 months. Therefore,
if the home loan/base rate changes, the fixed rate A further advance involves
stays the same. The fixed rate will only be quoted registering a further bond. In this instance, the
after registration of the mortgage bond. loan amount and registered amount increases.
• Variable interest rate • Re-advance
An interest rate option that is linked to the Home A re-advance is similar to the AccessBond Limit
Loans Base rate and therefore changes as the option and is offered in instances where you
linked rate changes. have an AccessBond link facility only or do not
have an AccessBond facility. You can apply for a
• Payment holiday re-advance up to the original loan amount.
You can apply for a payment holiday for up to
• Future loan (or re-advance for future use)
three months, which means that you will not pay
the monthly instalment (except the insurance You can register funds for future use in order
premiums and service fees) during the payment to avoid further registrations. The registered
holiday period. Once the period is over, the amount will be greater than the loan amount at
“missed” payments are spread over your existing inception of the loan. When you need to access
term and your instalment will be recalculated. the difference between the registered amount
This means that your instalment may increase. and loan amount, you will apply for a further
Granting of this option is at our discretion. loan.
• Term extension • Substitution of debtors
You can apply for a term extension of up to 30 A substitution occurs where a debtor is removed
years. This means your monthly instalments will from an existing home loan account.
be reduced but that you pay additional interest
• Switch
over the life of the agreement. Granting of this
An application for a new loan from us for an
option is at our discretion.
existing property that was previously bonded to
The following loan application options are another bank/home loan provider
offered by us:
Your home loan solution could comprise a
• New loan combination of these characteristics. For example,
An application for a new home loan on a new you could have an ordinary loan, full title with
property JumpStart being your product and AccessBond Limit
and variable rate as the options under your loan.
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6 Insurance Credit life assurance - Home Loan Protection
plan
Structural insurance (private dwelling houses)
(HOC) As with any significant debt, you should take
out life assurance to cover your debt in the
We require you to have structural insurance for
event of your death or disability. We offer a very
your home before we can register the mortgage
competitively priced life assurance product a Home
bond. This is because if your home is damaged by
Loan Protection plan (HLP) that is specifically
events such as fire or floods, we retain our security
tailored for home loans, which can be taken out
through the insurance on your home. It also means
during the home loan application process or any
that you will be able to repair your home. We will
time thereafter. The premiums will be included in
nominate the insurer (Standard Insurance Limited)
your bond instalment.
to provide a product that is called Home Owners’
Comprehensive Insurance (HOC) and your premium Credit life assurance is mandatory on DreamStart
will be included in your repayments, if you so loans and may be mandatory in other
choose. The premiums and sum insured will be circumstances. If the policy is mandatory, it will be
quoted in your quotation/cost of credit issued by included in your quotation/cost of credit.
us when your loan is granted.
You have the right to substitute our nominated
You have to right to substitute our nominated insurance policy and take out your own. In this
insurance policy and take out your own. In this instance, you are required to show proof of this
instance, you are required to show proof of this insurance before your bond is registered at the
insurance policy within 10 days of registration Deed’s Office. The policy must cover the balance
in the Deeds Office. The policy must cover the outstanding at any point during the term of your
replacement value reflected in your quotation. home loan. Premiums are thus based on the
Any other insurance policy besides our insurance outstanding balance and will therefore reduce
will not be debited to your home loan account over time. Any other insurance policy besides
and you will be required to pay this premium our insurance will not be debited to your home
separately loan account and you will be required to pay this
premium separately. A cession of the credit life
A higher monthly service fee will be charged should
assurance policy will be required.
you take out an insurance policy other than that
nominated by us. A higher monthly service fee will be charged should
you take out an insurance policy other than that
HOC is only applicable on full title properties and
nominated by us.
does not apply to sectional title or vacant land.
Sectional title owners will pay the equivalent Our HLP only applies to loan values equal to or less
insurance premiums via their body corporate levy. than R810 000
We will require proof of this before your loan is
registered. For more information, call us on 0860 123 001
In the event of any damage to your home and you Contractors All Risk
are not sure of what you are covered for, call the All builders are required to have Contractors All
number below to get clarity before proceeding with Risk (CAR) insurance to cover any unforeseen
repairs. circumstances during the building loan phase. It is
your responsibility to ensure that the builder has
Standard Insurance Policy Administration call centre:
adequate insurance cover.
0860 121 141
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Business
mortgage
insurance
Should your
property be used
for business purposes,
a different insurance policy
needs to be in place to cater for
the additional risks associated with a
business. Standard Bank Insurance offers a
Business mortgage (BMB) policy, which insures
the business property against structural damage.
BMB policies cover most businesses with a few You
exceptions, namely: have the
right to substitute our
• Home spas nominated insurance policy and take out your own.
In this instance, you are required to show proof
• Home bakeries
of your insurance within 10 days of registration
• Small-scale production/manufacturing at the Deeds Office. The policy must cover the
businesses replacement value of the property that is reflected
in the quotation/cost of credit. Any other insurance
• Home workshops and repair shops policy besides our insurance will not be debited to
• Hostels (student boarding houses) your home loan account and you will be required to
pay the premium separately.
• Conference rooms and centres
A higher monthly service fee will be charged should
• Bed and breakfast/guest house accommodation you take out an insurance policy other than that
(with a liquor licence) nominated by us.
• Lodging houses/boarding houses (with liquor
licences)
Ensure that you advise us should your property be
used for any of the above businesses as alternative
insurance will need to be arranged.
15
7 Costs involved in buying a home
Owning your dream home is not only about finding the right house, but also making sure that you can
afford it. There are costs involved in buying a home and it’s important to understand them.
Cost Description How is it paid?
Deposit The amount you have to put towards buying your To the seller’s transferring attorney.
property as we do not always finance the full 100%
of the purchase price. We may require this as a
condition of your loan. See definition of LTV.
Registration This is an amount charged by the attorney for Payment is made to the registering attorney
cost registering the mortgage bond. (Based on tariffs before registration. The costs may also
recommended by the Law Society.) be charged to the home loan account on
registration, subject to approval.
Transfer fee This is a fee charged by the attorney for Paid to the transferring attorney.
transferring the property into the buyer’s name.
(Based on tariffs recommended by the Law
Society.)
Transfer This is a government tax that covers the transfer of Paid to the transferring attorney.
duty the property from the seller’s name to the buyer’s
name.
Deeds Office A fee charged by the Deeds Office for registering To register title deeds: Buyer to pay transferring
registration the title deeds and mortgage bond. attorney.
fee To register mortgage bonds: Buyer to pay
registering attorney.
Home loan This is a once-off fee levied by us for initiating the The initiation fee is debited to your home loan
initiation fee new home loan account and will be indicated in the account. If you chose to pay the fee into the
quotation/cost of credit. account at date of registration, no interest will
be charged on the fee.
Monthly A fee charged by us for the monthly administration Charged to your home loan account in arrears
service fee of your home loan account. The fee will be and recovered in the debit order amount.
indicated in the quotation/cost of credit. The fee
will be higher if you have elected to take your own
insurance policies.
Cash deposit A fee charged for depositing cash into your home Charged to your home loan account at the end
fees loan on the AccessBond facility. The first cash of the month. If there is more than one deposit
deposit is free. during a month, the fees will be collated and
reflect once at the end of the month
Fixed rate Cost charged to you for the breach of a fixed Charged to your home loan account when the
breakage rate agreement (that is if you want to revert to fixed rate is cancelled.
cost a variable rate before the fixed rate period has
expired).
Insurance The monthly premiums paid for insuring the Debited to your home loan account at the end
premiums structure of the house of the month and included in your monthly
instalment if our policy. If other policy, you need
to pay the premiums separately.
Assurance The monthly life assurance premiums (if applicable) Debited to your home loan account at the end
premiums insuring you against death, disability, retrenchment of the month and included in your monthly
etc instalment if our policy. If other policy, you need
to pay the premiums separately.
16
8 Ten questions to ask your attorney 6. What will my transfer and bond costs be?
Your estate agent and attorney should be able
1. To whom do I pay the deposit?
to answer this question based on a schedule
This depends on what your agreement of sale
of transfer and bond costs. The actual
says. Your deposit can be paid to the transfer
transfer fees depend on the purchase price
attorney appointed to handle the transfer.
of the property. Bond costs depend on the
The attorney has trust accounts where your
loan amount registered and whether you are
money is protected. Ensure you receive the
buying in your own name or as a trust, close
appropriate receipts.
corporation or company. Your attorney will
2. Who receives interest on the deposit? advise you of your exact costs.
If you have given written authority to either
7. When must I pay the transfer costs?
the estate agent or the transferring attorney to
This usually happens a few weeks after the
invest the money in an interest-bearing account
sale, when you sign your documents. The
on your behalf, the interest is usually paid to you
transfer attorney will require payment, since
after registration of transfer unless the contract
they have to pay the transfer duty – the major
provides otherwise. You should arrange with
charge on most transfers – in advance, as well
the estate agent or the transferring attorney to
as the rates or levies due to obtain a clearance
sign a written authority as soon as possible after
certificate. Don’t delay making this payment,
paying the deposit to them.
as it will hold up the transfer.
3. To whom do I pay the occupational rent?
8. Who will register the mortgage bond?
Your occupational rent is deposited into the
We will appoint a registration attorney.
transferring attorney’s account for payment to
the seller. 9. Who will advise me of registration?
The transfer attorney should advise you of
4. When will I have to sign transfer
registration. You will also be given a final
documents?
statement of account. Your estate agent
This may only be a few weeks after the sale
may also phone you to confirm registration.
agreement is signed. Usually, your transfer
We will send you a letter advising you of the
attorney will wait until the bond is granted and
registration of your bond and the date on
they have received the cancellation figures for
which your first instalment is due.
the seller’s existing bond. Only then can the
guarantee authority forms be completed and 10. Where will I get the keys to the property?
signed. You can phone the transfer attorney It is best to make an arrangement with your
for an update at any time. estate agent to collect the keys from them on
the agreed day of occupation.
5. How long will it take to register the
transfer? Frequently asked questions
This depends on the circumstances and
due dates for the bond grant as well as the Home loan
guarantees stipulated in the sale agreement. If I have paid off my bond, does it mean that I
The average is about three months from the cannot use it in the future?
date of sale. When there are no complications, If you have not cancelled your bond, it is possible
registration can take place within two months. for you to leave it with us for safekeeping and you
In cases where there are complications, can then apply at any point for a readvance or an
registration can be delayed. You will need to AccessBond facility, which will allow you easy access
stay in contact with your transfer attorney. to funds from your home loan. We will consider your
request without you having to register a new bond.
17
Funds are registered for future use, why can’t I insurance policy arranged by us on your behalf.
transfer these funds via my AccessBond?
When registering funds for future use, you are • (Sectional title) Continuing covering
qualified only on the amount you are looking for at mortgage bond
that time. We need to reassess the property to see This document describes the security on
if there is enough equity to cover our exposure and which the home loan debt is based. It covers
whether you qualify for the full amount. all existing and future debts up to a maximum
amount stated in the document.
I paid a lump sum into my home loan account,
why didn’t my instalment come down in line • Indemnity
with the reduced balance? The indemnity links the mortgage bond and the
We give you the option to reduce your instalment loan agreement (Parts A and B) together legally.
if you wish to do so. You may prefer to have your The documents are treated separately because
instalment stay the same when a lump sum is paid we have the right to cede (give up) certain of
as this helps to reduce the amount owing on your our rights and/or obligations under the loan
bond. If you wish to reduce your instalment, you agreement (but not the mortgage bond).
must send us a written request.
• Suretyship (if applicable)
Can two debit orders run from two different • A document signed by sureties stating their legal
accounts to cover my bond payment? obligation should you default or breach any term
No, the debit order cannot be processed from two or condition of the agreement.
different accounts.
• Flexible debit order mandate
Why do I need to sign so many documents at
An instruction from you to us to debit the
the attorneys?
monthly repayment due until the debt is paid
You are entering into a legal agreement with us
off. A flexible debit order allows us to vary the
for a significant period of time (as long as 30
date on which the debit order is processed.
years). This means you and us need to ensure that
all relevant terms of the loan are recorded and • Power of attorney
acknowledged, and to comply with legislation.
This document is signed by you to appoint the
The following list highlights the general documents registering attorney to register the mortgage
that you sign at the attorneys and the reason for bond in our favour.
each:
• Authority to pay
• Part A Quotation/cost of credit A guarantee or authorisation given by you to
This document details the agreement between us to pay all amounts on registration to the
you and us regarding the interest rate, fees and seller or seller’s bank (or in the case of a further
charges applicable to the new loan as required advance, your bank account).
under section 92 of the National Credit Act Note that there may be other documents that you
(NCA). may need to sign depending on the individual loan
• Part B Terms and conditions or circumstances.
This document details the general terms and I have paid my bond in full, but have not
conditions under which the loan is granted received my title deed?
You must send us a written request to cancel your
• Part C Insurance terms and conditions
bond before we release your title deed.
As per section 106 of the NCA, we are required
to send you the terms and conditions of any
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Will non-payment affect my credit rating?
Any non-payment of your monthly home loan
instalment may adversely affect your credit rating
and your ability to obtain credit in the future. It is
extremely important to stay up to date with your
monthly repayments.
I cannot pay a portion or my full monthly
instalment, what should I do?
We are aware that unforeseen or unknown
circumstances arise, which may prevent you from
making your regular repayments. As soon as
you realise you have a problem or expect future
difficulties, contact us immediately to discuss your
be of a cosmetic nature and any increase
options. The sooner you do this, the better we will
in value of the property is minimal compared to their
understand your unique circumstances, which will
retail cost.
enable us to assist you in finding the best solution.
I’ve paid off a fair amount of my home loan. Can
How do I go about making arrangements to pay
I borrow again?
my instalments?
When you have paid off a portion of your home
You can speak to one of our credit consultants on
loan, you may borrow all or part of the repaid
0860 102 270.
amount. This is known as a re-advance.
Renovating my home
Will I have to register a new bond in this case?
How can I use my home loan to make alterations No, but the property might have to be reassessed.
and improvements?
Sectional title
• Further advances – if your property increases in
value you can register a second mortgage bond What am I buying?
to obtain additional funds. When you buy into a sectional title complex you
purchase a section(s) and an undivided share of the
• AccessBond – you can withdraw available funds common property. These are collectively known as
from your AccessBond. a unit.
• Re-advance – if you do not have an AccessBond What is common property?
you may apply for a re-advance to access part of The common property is that part of the
the amount you have already paid. development, which does not form part of any
section. Structures and areas in this category include:
• Building loan – you can apply for a building loan
if the renovations are significant. • Driveway
If I spend money renovating my property, why • Garden
does the value not increase by the same amount?
Renovating a home is part of maintenance, for • Swimming pool
example, repainting the house and replacing gutters.
• Corridors
These expenses usually prevent your property from
deteriorating but will not contribute to its value. The • Lift
upgrading of the property by replacing carpets with
• Entrance foyer
tiles, retiling the bathroom or adding another room
may increase its value. These items are considered to • Parking bay
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• Outer walls Who pays the levy?
The individual owners pay a monthly levy,
• Foundations
calculated according to their participation quota
• Roof or size of their unit. Ask for a copy of the body
corporate’s latest income statement to establish
What is an exclusive use area? whether it is financially viable. In other words,
It is part of the property which you do not own, but check whether the body corporate is in any
over which you alone have use. This could be any financial difficulty as this will have a negative effect
of the following: on how the complex is run.
• Parking bay Insurance
• Garden Why is the insured value of my property
different than the market value?
• Patio
The insurance figure is for replacement costs.
• Garage In a “worst-case scenario” it could be necessary
to partly demolish and remove rubble from the
• Storeroom
property before rebuilding the damaged parts of
Go through your contract with a fine tooth comb to the dwelling. These extra costs are included in the
find out what areas form part of the property you insured value. The land is also not insured, only the
want to buy. The areas should be marked clearly structure.
on the property plan, and the contractor should
Why do I need to have insurance to keep my
explain this to you in detail. Ask your estate agent
AccessBond, even though I have paid my bond
or attorney for advice before you commit yourself.
in full?
What is the body corporate? With an AccessBond, you are allowed to transfer
It is the collective name given to the owners of funds at any time without informing us, therefore,
the units in the complex. All registered owners we want the property to be insured at all times
of units are members of the body corporate. This as today the balance could be nil, tomorrow,
means you will be liable for the debt of the body there may be a debit balance after the funds are
corporate, so it is advisable that you scrutinise the transferred. If the property is not insured and you
financial statements of the body corporate before use your AccessBond, we are at risk should the
you decide to buy. property be damaged and there is no insurance to
cover the cost of repairs.
What is a levy?
These are the costs incurred in running the complex, If you would like to place your title deed in safe
which have to be paid by the body corporate. custody you may cancel your insurance, but no
AccessBond will be available. However, we strongly
What do these costs include? recommend that you maintain insurance on your
• Rates property at all times.
• Taxes and other charges Why can’t my insurance premiums be debited to
my current account?
• Insurance premiums Our insurance is designed to cover bonded
• Repairs and maintenance of the common property, and by debiting the bond only, all parties
property are guaranteed cover as the policy will never lapse,
whether or not the bond is paid.
• Wages and salaries of cleaners and other staff
• Water and electricity used on the common
property.
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10 Explaining jargon
Additional sum We register a further 25% over and above your approved registered amount to cater for the
costs associated with foreclosure. This may include costs such as rates and taxes not paid, and
advertising.
Affordability Takes into consideration your total monthly income and subtracts the expenses. If the
calculated amount equals or exceeds the instalment required on the home loan, then you can
afford the home loan.
Arrears Arrears are when you have not paid the required monthly instalment(s) to us and the balance
exceeds the balance limit.
Assessment This is the value we determined in respect of our security. We determine the property value to
ensure that we have sufficient security in the loan. This is not necessarily the market value of
the property.
Available balance These are the funds available to you under an AccessBond facility.
Balance This is the outstanding balance at a particular point in time reflecting the amount that you still
owe us.
Balance limit This is what the balance should be if there are no deposits or withdrawals out of the account
under an AccessBond. It determines the arrears status on your account.
Bond term This is the number of payments needed to pay off your loan.
Building loan This is a loan granted to build a house.
Cancellation The attorney responsible for cancelling the bond at the Deeds Office.
attorney
Clearance This certificate is required from an engineer where reinforced concrete is being used.
certificate
Concession A percentage below the variable rate based mainly on your risk profile. Concession pricing does
not always apply.
Contract price This is the fixed amount a contractor quotes to complete building a house according to the
plans supplied, with possible price escalation built in.
Damp-proofing This is a report on the work carried out by a specialist damp-proofing contractor, stating that
certificate the problem has been solved and that it will not occur within a specified time.
Debit order A debit order is a written mandate from you to us to debit your transactional account on a
specific date each month with your home loan instalment, including all insurance and assurance
premiums. Debit orders are mandatory on all home loans.
Deeds Office This is a government department that attends to the registration of transfers of immovable property.
Deposit The amount you contribute towards buying a property.
Electrical This certificate is issued by an electrician and is registered with the local authority to verify
compliance that the electrical installation on the property complies with local by-laws.
certificate
Estimated cost This is what our assessor estimates the house would cost to build based on prevailing building
costs.
Exposure in a This indicates the number of units bonded to us as a percentage of the total number of units in
complex the complex.
Expropriation This is where the local authority needs a portion or the entire property for its own use. We
would require a letter from you and the local authority, and an assessment would have to be
done on the remaining security.
Fixtures and These are attachments to a home which are deemed permanent. These could include light
fittings fittings, curtain rails, TV aerials and eye-level ovens, and may not be removed by the seller.
Freehold (full This is when you own the property as well as the land it is built on.
title)
Further advance This is when you register a further bond over the property to access additional funds.
Home loan pledge This is a certificate you receive from us before you start house-hunting, which details
how much we may be prepared to lend you. It is subject to our normal credit criteria and a
satisfactory assessment of the property.
Home Loan This policy covers the outstanding balance on your home loan account, where capital is repaid
Protection plan through normal instalments in the event of death, disability, retrenchment or dread disease.
21
Home Owner’s This policy provides cover for certain loss or damages to the property. These are specified in
Comprehensive the policy.
Insurance
Initiation fee This is a once-off fee allowed in terms of the National Credit Act to offset the cost of opening
your account.
Instalment amount This is the basic monthly amount payable on your home loan, excluding insurance or assurance
premiums, where applicable.
Instalment to ITI is the proportion of your monthly income that is used to service your monthly instalments.
income (ITI) It is typically a maximum of 30%. For example, if your monthly gross income is R30 000, the
maximum instalment would be R10 000 given a maximum ITI of 30%.
Interest accrued This is the interest accrued on a daily basis based on the balance outstanding. The daily
interest accrued amounts are added to the balance at the end of month in line with the NCA.
Interim interest Once funds are paid out of your home loan account on a building loan, interest is calculated
on a daily basis on the outstanding balance. The interest is debited to your home loan account
at month-end. The longer it takes to complete the building, the less money is available in the
account.
Latent defect This is a fault or flaw that is not immediately detectable, or is hidden from view on inspection
of the property.
Levy (sectional This is your share of the monthly costs incurred by the complex.
title)
Lodgement This is when bond documents are presented at the Deeds Office for checking by officials
before registration of your bond.
Loan amount This is the total value of the home loan granted.
Loan to value The LTV is a ratio of the loan amount to the assessed value of the property. For example, if the
(LTV) loan amount is R800 000 and the value is R1 million, the LTV will be 80%. If we have granted an
LTV that is less than 100%, a deposit is required as we will not finance the full purchase price.
Mandate This is an agreement between the seller and the estate agent to market the property.
Mortgage bond A mortgage bond is an agreement between you and us stating the security or collateral for the
home loan.
National Credit The NCA came into effect on 1 June 2007 and regulates credit providers in terms of granting credit
Act (NCA) to consumers. The NCA replaced the Usury Act but not in its entirety as some provisions of the
NCA only apply to agreements entered into after 1 June 2007. The NCA does not apply to juristic
entities (CC, company and trusts with more than three trustees) in terms of mortgage loans.
NHBRC The National Home Builders Registration Council ensures that builders extend their
commitment to customers by providing a five-year warranty.
Non- NAEDO is a payment system used by us that regularly tracks your payment account to ascertain
authenticated whether there are funds to take the funds to pay off the required monthly loan instalment.
debit orders Only used for instalments less than R5 000.
(NAEDOs)
Non-resident This is a person whose normal place of residence is outside the Common Monetary Area
namely Lesotho, South Africa, Namibia and Swaziland.
Occupation This is the date the buyer moves into the property.
Occupational rent This is an agreed amount paid by the buyer to the seller, if the buyer decides to move into the
property before transfer of ownership takes place.
Offer to purchase This is a written offer from the buyer to the seller, which is usually prepared by the estate
agent. Once signed by all parties it becomes a legal and binding contract between the seller
and the buyer.
Prepayments This is when you deposit funds into your home loan account over and above the ordinary
monthly instalment which places the account into advance.
Principal debt Includes all amounts reflected in clause 1 of the quotation/cost of credit.
Possession This is the date when the risk in the property passes to the buyer.
Progress payment This is a form signed and completed by you as building work progresses. The assessor does an
form inspection and releases the funds accordingly.
22
Property This is the definition of the property sold in a sale agreement. It can simply be its street
description address but usually records its stand number and suburb as described in the owner’s title deed.
Property A written document issued by us to the seller’s bank or the seller guaranteeing that the sum
guarantee stated in the guarantee will be paid on transfer of the property at the Deeds Office.
Re-advance When you have repaid a portion of your home loan, you may borrow all or part of the loan
amount.
Registered amount This is the value of the mortgage bond registered at the Deeds Office. The registered amount
will always be equal to or more than the loan amount.
Registration The attorney that ensures that the bond is registered at the Deeds Office.
attorney
Registration This is the process where ownership of the property is transferred from the seller to the buyer
through a deed of transfer. Your home loan will be secured at the Deeds Office as a mortgage
bond.
Replacement cost The amount determined by Standard Bank Insurance of the cost of replacing the property
should an insured event occur. The replacement cost can be different to the property value
depending on the loan amount.
Repo rate This is one of the credit management tools used by the Reserve Bank to regulate liquidity
in South Africa (customer spending). We borrow money from the Reserve Bank to cover
our shortfall. The Reserve Bank only makes a certain amount of money available and this
determines the repo rate. If we require more money than what is available, this will increase the
repo rate and vice versa.
Retention This is the money retained by us and paid to you once your bond is registered. Payments are
made in the form of progress payments as work on your house progresses.
Risk premium A percentage over and above the home loan base rate, which can be charged on an account
according to certain product rules.
Safe custody This is placing the bond documents in a secure place once an instruction has been issued and
the bond has been paid up.
Sectional title This is an entire complex (flats and townhouses) divided into individual units which are sold
separately.
Service fee This is a monthly fee charged to cover the cost of maintaining your home loan account on our
system.
Servitude A servitude is a right to access which allows a local authority access to a property for inspection
or installation of pipes, sewerage lines, electricity cables and so on. It is registered against the
title deed.
SG diagram This is a surveyor general’s diagram and shows sub-divisions, servitudes, expropriations and so
on. It becomes a loan condition when the assessor cannot identify the property to be bonded
on the latest municipal map.
Shortfall A shortfall arises when our estimate of what it will cost to complete the building work is higher
than the contract price quoted by the builder and also results from interim interest not being
paid during the building loan period.
Share-block Companies own these properties and you buy the shares representing your unit or house.
developments Because there are no title deeds we cannot consider granting loans over share-block
developments.
Sole mandate This is an agreement between the seller and the estate agent to exclusively market the
property. Once the agent is allowed to market the property it has sole rights.
Subdivision Subdivision is the dividing of a property into two or more portions.
Subject to sale An expression used by estate agents to describe a sales contract that will only become
unconditional between the parties if and when the buyer sells their own property.
Suspensive This is a clause in the agreement of sale where the validity of the contract is made subject to
condition the occurrence or non-occurrence of a future event.
Title deed This legal document is registered at the Deeds Office as proof of ownership of the property.
Timeshare This is a property development where occupancy time is sold. We do not grant home loans for
timeshare properties.
23
Transfer attorney The attorney responsible for the transfer of the property from one name into another. The
transfer, registration and cancellation attorneys can all be the same person.
Uncleared Any cheques or cash deposited directly into the home loan account at an AutoBank machine or
at a branch which remain uncleared for 10 working days.
Vacant land This is a loan to buy a vacant stand with a view to building on it in the future.
Variable interest The official interest rate charged by us, which fluctuates according to the repo rate. This is
rate sometimes called the Home Loans Base Rate.
Waiver of lien This is a legal document signed by the builder waiving all rights to attachment of the property
in our favour in the event of a dispute arising for whatever reason between you and the builder.
Waterproofing This is a guarantee by a waterproofing contractor that the property has been adequately
certificate waterproofed.
Zoning The local authority determines the purpose for which your property may be used, for example,
residential or business. If your property is granted business rights, talk to your local authority
as it may affect your ability to sell it.
11 Useful contacts
Standard Bank Home Loans call centre (queries):
0860 123 001
Standard Bank Home Loans call centre (applications):
0860 500 000
Standard Insurance Policy Administration call centre:
0860 121 141
Standard Bank Debt Management call centre:
0860 102 270
Standard Bank website:
www.standardbank.co.za
24
Code of Banking Practice – Conduct for Home Loans
Buying a property with a mortgage bond may be your most important financial commitment, therefore:
• When you apply for a home loan we will explain its operation and repayment to you, including all the charges
and costs, the benefits of payment acceleration and the additional interest and costs that will be charged to
your account should it fall into arrears.
• We will assist you to understand the wider responsibilities and rights that you will have as a property owner, and
assist you with a detailed affordability assessment should you require it. This could include informing you about
the repayments on your loan and additional costs that apply to home ownership, such as rates and taxes.
• We will explain to you that you risk losing your property should you not keep up your loan repayments.
• We will also explain the steps required by law should we have to repossess your property due to your failure
to make your payments or to comply with any other terms and conditions of your contract with us.
As bankers, we have neither the skills nor the resources to monitor and control the quality of the property you
are building or buying. Our appraisal is solely to enable us to assess the value of the security to us. It is not
intended to be an evaluation of the present or future market value of the property, nor does it have to be the
same as the purchase price. We do not necessarily inspect the property and do not accept any responsibility or
liability for the structural or other condition of the property, even if the loan is a development or building loan.
We will explain to you the need to be careful when signing building progress payment documents. We will
ensure that you are informed of the different types of insurance, whether we require insurance to be taken out
and whose responsibility it is to arrange for the required cover.
Issues of home quality are the responsibility of the seller (or builder or developer) and yourself as buyer.
Homes younger than five years may also have a National Home Builders Registration Council Limited Warranty.
You must satisfy yourself to the best of your ability that you are buying a sound property and, if necessary,
obtain assurance as to the structural quality of the property, compliance with local authority requirements and
replacement costs of the buildings and improvements from the relevant experts.
Should you require it, we will provide you with:
• The assessed security value of the property; and
• The minimum replacement cost that we place on the buildings and improvements for insurance purposes.
When your home loan has been repaid in full, we will inform you how insurance premiums, and other charges
and administrative matters can be dealt with in the future.
Copies of the entire code are available from all our branches and the Banking Association of South Africa. You
can also view it at www.standardbank.co.za or on the Banking Association’s website at www.banking.org.za
We understand that buying a home is an important financial decision and that is why we’ve put together all the
information you need to make it as stress-free as possible. It is important that you get it right by choosing a
home loan that fits your financial circumstances and meets your particular needs.
We are sure you will find this information helpful. Whether you’re buying your first home or you’re a bit rusty on
what’s involved, we have the answers to your questions.
We hope that this information assists you in making the right decisions when buying a home. If you have any
questions or would like more information, you are welcome to call us on 0860 123 001, visit
www.standardbank.co.za or a branch.
25
Notes
14
Authorised financial services and registered credit provider (NCRCP15)
The Standard Bank of South Africa Limited (Reg. No. 1962/000738/06). SBSA 33405 12-09