Terms You Need to Know When Buying Property

Here are some standard phrases home buyers are likely to encounter during the buying process:

Agreement of sale - This is the basic agreement of sale between the seller and the buyer. All terms and conditions are included, such as purchase price, sale conditions and date of sale, home location, and any ongoing required costs.

Appraised Value - The estimated value of your property determined by a qualified appraiser based on his/her knowledge, experience, and analysis of the property. This is a brick and mortar valuation. A property consultant provides a market-related valuation.

Bond - A loan for which your house functions as the assurance. The lending institution uses the actual house as a form of security for the loan in the event that repayments are not made.

Bond Assurance/Insurance - Life assurance on the life of the borrower to cover the amount owing on the bond.

Bond Originators - They provide free bond application service, assist individuals to obtain the lowest possible home loan rate and guide them through the application process.

Bridging Finance - A short-term or temporary loan to help a buyer secure the purchase of a new property before an currently owned property has sold.

Buliding Plan - A floor plan showing the architectural layout of the building and the specifications of each room.

Clearance Certificate - A document issued by the local municipality to confirm that all outstanding rates, taxes and levies are paid when a property transfer takes place.

Conveyancer - An attorney (lawyer) qualified to prepare documents and attend to the transfer of a fixed property and the registration of mortgage loans and servitudes.

Domicilium Citandi et Executandi - A physical address where the delivery of legal notices will be accepted by a party to a written agreement.

Deposit - The amount of money a buyer has saved to contribute towards the purchase of the property.

Deeds Office - The government department where rights and interests in immovable property are registered. These are regionally located.

Deed of Sale - A formal document that states the particular information of a property transfer and outlines the terms of the agreement.

Fixtures and Fittings - Additional attachments that are considered to permanently belong to a property such as curtain rails, ovens, lights and anything that is affixed to the walls, floor or ceiling. These vary from property to property.

Freehold - Property where the owner has full rights to the entire property and takes on all responsibilities, such as a free-standing house.

Gross Income - Your total monthly income before taxes and other expenses are deducted.

Homeowners Insurance - An insurance policy that covers your house (property structure and personal belongings) in the event of damage or loss.

Instalment Amount - The monthly amount paid to the lender as part of the total home loan amount for the entire duration of the agreed term (months or years). It includes the monthly interest on the loan as well as an element of capital repayment, together with any monthly costs and insurance premiums.

Initiation Fee - A fee charged by a bank to cover the initial costs of processing a home loan application, for example the property appraisal and a credit report.

Joint Income - The total gross income of two parties or partners living in one household.

Offer to purchase - The legally binding document setting out the proposed purchase price and conditions signed by the buyer. If the seller accepts and signs it, the offer to purchase becomes a valid sale agreement.

Prior occupation - A buyer's option to take occupation of a property before transfer takes place. An agreed occupational rent is usually payable by the buyer until registration of transfer.

Qualified Buyer - Someone who meets a bank's requirements of affordability and has qualifed for a home loan.

Pre-Approval - The pre-approval process involves an evaluation of a potential buyer by a lender that determines whether the borrower qualifies for a loan from the lender, or the maximum amount that the lender would be willing to lend. This includes a thorough look into the buyer's income and expenses, as well as credit score.

Suspensive condition - A provision in a contract which suspends the confirmation of the sale until a specific condition, such as the approval of a mortgage loan, is fulfilled.

Term - The period (usually expressed in months) over which the borrower intends to repay the mortgage bond. This is typically 20 years (240 months).

Title Deed - A legal document filed at the Deeds Office that states ownership of a property and contains all the details of the property, the sale agreement and its owner.

If you have any questions, contact us on info@kaandevelopment.co.za.