Why would you do it?

Well the answer is simple: To get a better interest rate on your home loan. A reduction of merely 0.5% on your interest rate could save you thousands of Rands in the long run. Another reason to switch is that not only has another financial institution given you a better rate but they may have also offered you additional lending against your property.

The Costs of Switching.

The two points mentioned above makes it look very attractive to move your home loan, but you must be mindful of certain costs involved. Your current financial institution, more than likely, has penalty clauses written into your initial home loan agreement, which means you may end up paying 90 days’ penalty interest on your home loan if you cancel, which could amount to quiet a hefty amount.

Who is going to pay the attorneys fees and other registration costs to register your new home loan and what about the bond cancellation costs of your existing home loan? There are also valuation fees and initial administrative fees to be paid on the registration of a new bond!

With all this in mind it could still be a worth while exercise to move your bond, though. Due to the competitive nature of the market some financial institutions are prepared to waive valuation and administrative fees as well as pay for (or a portion of) the registration and cancellation costs involved.

How do you get around the 90 days penalty fee?

It is advisable to contact your financial institution to discuss this. Most financial institutions accept a 90 days notice period of your intention to cancel your home loan.

If you decide to switch your home loan you will need to provide the new financial institution with copies of your pay slip, bank statements, IDs and all the necessary documents required to prove affordability.

A Sequestration Order is effective for 10 years, however you may apply to the High Court for rehabilitation at an earlier stage. You are automatically rehabilitated after 10 years, if you do not apply for rehabilitation.

Rehabilitation listings remain listed for 5 years after the date of rehabilitation.

This will protect you from your creditors and no one may take judgment against you, however, this is temporary. In terms of the Administration Order, the court decides how much you need for basic necessities, and then determines how much must be paid to an administrator.

The administrator then makes payments every 3 months to your creditors. The cost of an Administration Order can be very high and you should consult with an attorney to check these costs in order to make an informed decision before a formal application is made.

The Administration Order remains listed while you are under administration and for a further period of five years after that.

The Magistrates Court has jurisdiction to grant judgement on debt amounting below R100 000. The High Court has jurisdiction for amounts exceeding R100 000.

A judgment has to be rescinded before it can be removed. An attorney can apply to the court to have the judgment rescinded. Some financial institutions and chain stores (in the case of Judgement granted in the Magistrates Court) will not consent to a rescission of judgment even if the debt has been paid in full. They will update the listing to read “debt paid up in full”. If the judgment is not rescinded, it remains listed for 5 years.

A High Court application for a rescission of judgment is slightly more complex and the process is more costly, and even if the consent of the Respondent is obtained, it cannot be guaranteed that the rescission will be granted.

• Financial Institutions;
• Medical Practitioners;
• Hospitals;
• Chain Stores, etc.

A default usually remains listed against your name for 3 years, but in certain cases it can be removed sooner. It is possible to remove a default listed by a medical practitioner or hospitals, provided that the outstanding debt is paid up in full and the medical practitioner or hospital consents to the removal of the default.

Companies who are members of the Consumer Credit Association do not remove listings even if the debt is paid up in full. The reason that the Consumer Credit Association gives for this is that they are bound by law. Most of the chain stores are members of the Consumer Credit Association.

If you find yourself in such a situation, it is advisable to immediately seek legal assistance in order to negotiate with the other party to have the listing removed, or updated to “paid up in full”, which will then remain listed for a period of 3 years from the date of submission.

By the time the client reaches the attorney, he has already found his dream home and signed an offer to purchase. He is in a hurry to get his name cleared so that he does not loose the property to another buyer by the time the offer to purchase reaches it’s cessation.

What one needs to understand, is that there is a long process involved in removing black listings. Each case differs from the next, and needs to be investigated before the client can be informed of how long the process will take. The cooperation of all the parties involved, is critical to ensuring that the process is dealt with in as shorter time as possible.

These parties are/or may include:

• The client;
• The parties that have blacklisted the client;
• The courts, in the case of judgements

.

Everyone who has ever applied for credit is listed with the credit bureau. When you apply for credit with a company that subscribes to a credit bureau, that company will have access to your credit history, which is provided by the credit bureau. The company can then make an informed decision and assess their risk in granting you the said credit. Most companies will not grant credit to individuals who have negative listings.

Every person can obtain a copy of your credit report free of charge from a credit bureau Once a year in the month of your birth date.

For more information visit:
http://www.transunionitc.co.za/

This means that the purchasers or sellers can have access to cash before the registration and transfer process has been completed. The seller is able to use the funds to pay outstanding rates and taxes. The purchaser can use the funds to pay the transfer fees so that the process is not delayed.

Bridging finance is a good tool to help you out of a “cash-flow” problem, like having to wait for the profit of the sale of your house to pay for the registration and transfer costs of your new home.