Glossary of Terms
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.
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.
Life assurance on the life of the borrower to cover the amount owing on the bond.
Short-term loan to cover the time until a person receives funds anticipated, usually from a transaction in progress, to conclude another transaction.
This is a loan one would take to build a house and is not typically available through SA Home Loans.
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.
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 5 day "cooling off" period.
NOTE: The statutory cooling off period only applies to properties in respect of which the purchase price is R250,000 or less, although purchasers and sellers are free to agree on a cooling off period between themselves.
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.
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.
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.
The government department where rights and interests in immovable property are registered. These are regionally located.
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.
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.
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.
The SA Home Loans Home Owners Comprehensive Insurance covers loss or damage to immovable property.
In terms of the National Credit Act, a credit provider is permitted to charge a consumer a fee for entering into a credit agreement with them. This Initiation Fee is intended to cover all costs incurred in completing the credit process (e.g. obtaining credit bureau reports, valuations, deed searches etc) as well as initial administration expenses. This amount is worked out in terms of the loan value/parameters laid down in the Act.
This is the basic monthly amount paid for your home loan. The instalment 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, SA Home Loans 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.
The annual rate charged to a borrower on a loan. Interest is calculated on the daily balance of the loan and capitalised monthly.
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 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.
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.
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.
Lender (creditor), usually a bank, who advances or lends money on the security of a property purchased.
Borrower (debtor) who borrows from a lender by mortgaging his property to the lender as security.
The Net Present Value (NPV) is the value of a future sum of money which is calculated and expressed in today’s terms.
Assets that cannot be easily converted into money.
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.
The monthly fee which may be levied on your home loan in respect of routine administration cost of maintaining your loan.
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.
A bond that you had previously with one financial institution but then changed to SA Home Loans.
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. At SA Home Loans all clients are entitled to repay their bond over a shorter term than originally specified if they so choose.
Legal document registered at a Deeds office, as evidence (proof) of ownership of a property by the registered home owner.