South African Home Loan Terminology

South African Home Loan Terminology

Access Bond – You can draw money ( up to a predetermined amount ) from this type of home loan.
Administration Fee – This fee is charged by the lending bank to cover the initial costs of processing a home loan application.
Agreement of Sale – Contract stating the terms and conditions under which the property is sold
Assessment – This is the bank’s assessed value of the property. It will usually be done prior to the final approval of your home loan.
Assessment Fee – Cost of the administration work that accompanies an assessment.
Bona Fide – Means ” in good faith”
Home Loan / Bond Costs – Fees payable to the registering attorney which includes conveyancer’s fees, stamp duty and VAT.
Home Loan / Bond Registration – Fee payable for the registration of a home loan in the new property owner’s name.
Home Loan / Bond Term – Original term over which the home loan was taken.
Broker / Estate Agent – Person or persons who bring buyers and sellers together and negotiate contracts for them.
Building Loan – This type of home loan is usually issued to a buyer of vacant land for the purpose of building on the land.
Capped Home Loan Interest Rate – Limits the amount the interest rate on an adjustable rate home loan can change over the life time of the home loan.
Collateral – Assets that are required as security for your home loan.
Contract of Sale – This is the agreement between seller and buyer covering the price, terms and conditions of the sale.
Conveyance – Document used to effect a transfer.
Credit Profile – A report detailing the credit history of a prospective borrower that’s used to help determine borrower creditworthiness before a home loan application will be approved.
Deed – This is a legal document by which title of a property is transferred from one owner to another.
Default – Term use to denote failure to make payments on a home loan.
Equity – The amount by which the value of the bonded property exceeds the outstanding amount on the home loan.
Finance Charge – Interest charge on a home loan
Fixed Home Loan Rate – The interest rate on a home loan is fixed for an agreed period of time and will not change for that period even if the variable home loan rates rise or fall.
Foreclosure – Legal process by which a bonded property may be sold to pay off a home loan that is in default.
Freehold – Ownership of the property as well as the land on which the property is built on
Grace Period of Home Loan – Amount of time after the due date of the home loan payment in which a payment may be made without a late penalty fee being applied.
Home Loan Application – A statement of personal and financial information required by the bank when you apply for a home loan
Home Loan Plus Costs – Allows borrower to lend more than 100% of the property value to cover the registration and transfer costs.
Interest – Fee paid for borrowing money usually calculated as a percentage of the remaining balance of the amount borrowed.
Interest Rate on Home Loan – Annual rate of interest charged on a home loan.
Lender – Bank, Mortgage Company, or Mortgage Broker offering the home loan.
Mortgage Broker – Individual or company that arranges home financing for borrowers.
Mortgage – Agreement with the bank stating that the bank will lend you a certain amount of money in the form of a home loan that will be paid back over a period at a certain interest rate.
Offer to Purchase – Offer in writing from the buyer to the seller which becomes a legal contract once it is signed by all the parties.
Pre-Approval – Lenders firm commitment on a home loan.
Prequalification – Process of determining the amount of home loan you are eligible for.
Purchase Agreement – Contract stating the terms and agreement under which the property will be sold.
Refinancing – Process of paying off one home loan with the proceeds of a new home loan on the same property.
Second Mortgage – Additional mortgage placed on a property that has rights that are subordinate to the first mortgage.
Term of Home Loan – Period between the beginning of the home loan and the date the entire balance of the home loan is due.
Title Deed – This document gives evidence ownership of a property.
Underwriting – Process of determining the risks involved in a particular home loan and establishing suitable terms and conditions for the home loan.