Real Estate Investor Magazine South Africa June/ July 2019 | Page 40

FINANCE
How repeat buyers can
finance their new home
Helpful insight into purchasing your new home cost effectively
R
epeat property buyers rely on the equity from the sale
of their first home in order to finance their new home
and the process of cancelling one home loan to take out
another is not always simple.
RE/MAX Southern Africa Regional Director and CEO,
Adrian Goslett, says that homeowners should consult with a
bond originator to help them further understand how to go
about the process.
Goslett explains the importance of gaining advice from a
bond originator when wanting to finance their new home.
“While experienced real estate professionals will be able
to outline the general processes and procedures to follow, a
bond originator will have the specialist expertise to know
what each of the various banks require for these transactions.
Consulting with a representative of both professions will help
home owners navigate the various complexities involved in
transactions that involve more than one home loan,” he said.
According to BetterBond, SA’s leading bond originator,
Chief Operations Officer Mary Lindemann, sellers will need
to continue their repayments of their existing bond until it
is cancelled and the property is transferred to the name of
the new buyer. Lindemann points out that when a potential
owner purchases a new home, they will not be required to start
making bond repayments on that property until it is registered
in their name.
“To avoid having to pay two bond repayments at once,
repeat buyers therefore usually ad a suspensive clause to their
Offer To Purchase (OPT) on the new home that makes the
offer subject to the sale of their existing property and the
simultaneous transfer of the two properties. Generally, there is
a time limit on the sale of the existing property and once this
happens, the transferring attorneys will then coordinate the
registration of the transfers,” said Lindermann.
A suspensive clause is important as the bank assesses the
repeat buyer for the affordability to purchase new property.
Lindermann explains that in order to qualify fro the bond on
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JUNE/JULY 2019 SA Real Estate Investor Magazine
a new home, the buyer must go through the entire application
process again and provide all supporting documentation.
“..when filling in the application, it is very important to
note the intention to sell the property already registered in
his/her name, as this can determine the success or failure of
the application,” said Lindermann
In order to review the bond application, banks will take a
look at the track record of payments on the existing bond as
well as the outstanding balance owed into the account. This
will help the bank to determine an interest rate and loan
amount they are willing to offer for the purchase of a new
property.
Goslett advises home owners to prioritise their home loan
repayments, adding extra sums to their repayments where
possible.
“When the time comes to apply for another home loan,
partial or skipped payments will count against you. On the
other hand, adding a little extra to your monthly instalment
from time to time will count in your favour when it comes to
negotiating an interest rate on a new home loan.”
Home owners are encouraged to contact a bond originator
as Goslett says that advice is freely and readily available.
“If you are unsure what processes need to be followed
and what you can afford, your first step should be to book
a consultation with a bond originator who will be able to
advise you free of charge, and can assist you in obtaining
prequalification for a home loan so that you know what your
buying power is. Thereafter, I would recommend arranging
another free consultation with a real estate professional who
can provide you with insight into what sort of homes are
available in your price range, as well as what price your home
will fetch within the current market,” Goslett said.
Potential buyers can contact a real estate advisor from
RE/MAX by visiting www.remax.co.za
RESOURCES
RE/MAX Southern Africa/ BetterBond