A home loan, more specifically, involves a buyer who takes funds from a lender, which in this case is usually a bank or any other financial institution, in order to be able to purchase a certain property. This amount is paid back by the borrower based on the agreed payment schedule and method. This type of loan is very similar to that of other loans in terms of the interest rates included in the whole arrangement.

The amazing power of the World Wide Web has made it possible to access this privilege online. More and more home loan applications can easily and quickly be done over the internet in just a couple of clicks. Various lenders have made them self accessible online, extracting lesser amount of effort from the interested borrowers.

When one fully decides to get a home loan, it is essential to start out by doing a thorough research on the choices one can avail of. Going through online sites of financial institutions, banks and other lenders can give a good amount of information regarding the homes loans that they offer and the features of each one. This is also a good way to compare the said offers and be able to choose the one that suits the need of the borrower.

After having a good look at the various options, one can then decide on which lender to go with. The thing is although most loans are more or less same as each other, there are certain features that make one stand out over the other. Such differences matter to certain people. It is up to the borrower to determine which considerations are most important to take note of.

Application forms are made available online by lenders. However, the whole application process cannot be completed online. Filling up and submitting the application form takes only a couple of clicks and less than an hour, but the whole process of getting a loan takes more than that. Aside from all the documents that are required by the lender, there might also be a need for a personal meeting for the assessment on where the borrower meets certain qualifications.

Applying for a home loan, or any other loans, online has its perks such as being time-efficient, but it also comes with certain disadvantages. All these facts should be carefully thought about by the borrower before further steps are taken.

• The deposit; Depending on your financial position and the amount you wish to borrow, the Bank may require you to pay a deposit. For example, you qualify for a loan to the value of 80 % of the property value and need to pay 20% deposit.
• Occupational rent; When you occupy your new property before registration has taken place. The Seller could insist on the payment of occupational rent – this agreement need to be stipulated in the Offer to Purchase.
• Transfer costs (duty); It is tax paid to the Receiver of Revenue when buying property and transferring it to your name. When buying vacant land you will pay transfer duty only on the vacant land. If you buy an existing home you will pay transfer duty on the value of the land and building. It is charged on a sliding scale:
• Conveyance fees (Attorney fees) are recommended tariffs by Law Society; As a rule of thumb, you should allow for between 5% (if less that R500 000) and 8% of the amount of the purchase price of the property for all the other costs involved in purchasing a home. This amount excludes the deposit. These costs are commonly referred to as Transfer Costs or Registration & Transfer Costs and are paid by the purchaser.

When developers speculate, they use their own money to fund a project and then sell each unit on completion. This way the developer takes full risk. When a developer sells “plot-and-plan”, the risk lies with the buyer.

The developer makes periodic withdrawals from the buyer’s building loan with a bank, which takes place in stages after the bank’s valuator has confirmed completion of the stage. The buyer then authorises the payment to the developer. In this way the buyer, at least, has control of what he is paying for.

Off-plan buyers need two contracts. You should sign two sale agreements when buying a freehold home “off-plan” or in a “plot-and-plan” development. One contract to purchase the land and the other to build the home itself.

The second agreement (with the builder) should cover everything that is discussed and agreed upon with the person or company who is actually building the home – from the building price, the floor plan, the electrical wiring, the plumbing, the paint specifications, the fixtures and fittings, and so on.

Off-plan buyers are often not aware of the need for this second agreement, and the law only stipulates that the transfer of land cannot take place without a written contract. So, you may find yourself in a situation where you have a piece of land, but with no agreement for anyone to build a home on it.

Reputable estate agents working for developers or builders will thus always ensure that the sale agreements between buyers and builders are concluded in writing and in detail.

Buying off plan is attractive if you want to own a new property and be the first to live in it. Most developments include all the costs involved so the price you see is the price you pay which is ideal as there are no surprises. All your legal costs may also be included in the package.

To purchase off plan you normally requires a 10% deposit to secure the purchase and you may start paying your bond off only after 18 to 24 months after the completion of your property.

This is very convenient, as the property prices normally would have gone up by then which means your asset is probably worth more, that what it is bonded for. Another advantage to buying off plan is that it requires minimal maintenance as everything is new and has not aged. In certain circumstances, you even get to choose your own finishes.

It is important to take care to read through the fine print on the contract as well as the possibility of building delays.

Few disadvantages of buying Plot and Plan

Buyers have difficulty in visualising the size and exact interior layout of the property. The picture you have in mind (following the flashy brochure advertising the development) may not always be what the development turns out to be.

Read the contract to ensure that strict guarantees are in place and that the developers cannot change the layout once they start building.

There is not always a fixed date for completion and there are usually delays in completion by factors of bad weather, municipal approvals or developer running in financial difficulty. The job may not be finished in time with the specified period, in order for you to take occupation. You may end up fighting lengthy, costly legal battles due to developer/builder cash flow problems

There is a possibility that you could be sold short of the quality of finishes you initially signed for.The developer that sold you the “plot-and-plan” may sequestrate or liquidate before completion of the project.

You then need to find a builder who will complete the project, and you may end up paying more than you bargained for because he may quote differently or use different materials or purchase his stock at different prices, and so on.

You may be one of the first owners in the development to move in. You may be surrounded by the building operations of the rest of the uncompleted units for quite some time. You will need to landscape your garden from scratch.

Few advantages of Plot and Plan

Usually only 10 percent deposit is payable. Buyer’s responsibility towards bond repayments delayed for 18-24 months. In that period the value of the investment can grow substantially. Transfer duty only be payable on purchase amount of the plot and not the building agreement amount.

Servicing Your Vacant Stand.

Please keep in mind that you have to budget for servicing the bill from the local council and body corporate or home owners association (if any) on your stand, even though there are no improvements on it yet. As soon as the stand is registered in your name, you are liable for paying the rates and taxes and any levies, no matter how long you take to start building on it.

Professional Advice & Services.

You need expert advice. It is worth paying for a professional now, as this may save you a substantial amount later. Make sure you consult with reputable architects, quantity surveyors, development consultants, building contractors, plumbers electricians, and so on.

A Quantity surveyor is a financial consultant who specialises in the construction industry whose training and experience qualifies him to advise you on costs and contractual arrangements and to prepare contract documents.

He acts in liaison with architects, consulting engineers and contractors to safeguard the client’s interest. He is an independent expert who operate in a specialised area of the construction industry.

The title quantity surveyor was reserved under the Quantity Surveyors’ Act of 1970 for exclusive use by those who had obtained the necessary qualifications and experience prescribed under the Act.

In terms of it, such persons must register with the South African Council for Quantity Surveyors before they may offer their service as consultants to the public. For more information on Quantity Surveyors, please visit www.sacqsp.org.za and www.asaqs.co.za

An Architect will design your home to your specifications and budget. Once you have approved the plans, he will submit them to the NHBRC for approval and take care of all the other architectural requirements. The architect can also manage the building process for you and take responsibility for authorising process payments from the bank to the building contractor.

A Building Engineer will, after the architect has designed your home, design the foundations for the house according to the grading of the ground. He will also design the upper storeys’ floor slabs and the stairs.

Either the builder of the engineer will then build these structures, but it is ultimately the engineer’s responsibility, and he has to make sure that these structures are built according to standard.

The Building Contractor should be registered with the NHBRC. Although, Do not rely on the NHBRC for recourse against bad workmanship by a builder or developer. An NHBRC warranty certificate is only proof of enrolment with the NHBRC. It is not a guarantee of good workmanship, and it does not cover all building defects.

It is valid for five years and after three months from the date of occupation it covers structuraldefects only. Find out what other homes were built by the builder. Visiting as many of these homes possible and try to view one or two of them. Talk to the owners and find out what their experiences were with the builder. The same applies for any other contractors like plumbers, electricians, and so on.

Building Contract Facilitators.

These are companies who liaise with owner-builders, architects and builders (including any sub-contractors, used by the builders) throughout the building project to ensure that the project is completed according to the highest standard.

They facilitate the owner-builder in selecting finishes, which in turn facilitates builders in terms of getting the project completed timeously. From tendering for quotations to arranging samples of products such as tiles, lighting and many other finishes for the owner-builder to make their selections at their leisure.

They can also assist with finance applications, the marketing & sales of the finished home, management of the entire project, interior design an even sometimes garden landscaping.