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19 Sep 2023

Making the most of your Home Loan – What is an access bond and how does it work?

An access bond allows you to pay any extra funds that you have, into your home loan account. Bear in mind that your monthly bond repayment consists of amongst other things, the capital amount that you borrowed, and an interest component. If you then pay in more than you actually need to, this is credited to the capital amount. This means that the interest will be slightly less, the next month. You will also have access to this additional amount because you have paid it in advance.

An access bond offers a tax-free savings opportunity by allowing you to effectively save money and at the same time, save interest on the loan!

This facility is either included in your home loan when your finance application is approved, or you can apply at your bank once your bond has been registered.

There are two different ways to set up your access bond:

The first is the default facility where your monthly instalment (capital and interest) stays the same each month, regardless of any extra amounts you pay in, and your home loan term will then decrease according to the extra funds you pay.

The second and alternative option is for the debit order amount to be adjusted, to take into account the reduced capital owing, which determines the amount of interest that is payable. If you want to pay off the bond sooner, the first option is then the better one.

It is important to note however that if you do build up a credit in your home loan (being the access facility we are discussing), then, once you do decide to access this credit and you draw money from the home loan account, then the interest repayment will of course increase again because now your home loan will be more than it was the previous month. But, that said, this is a far cheaper way of “borrowing” money than a short-term loan, where the interest rates are far higher than with a home loan.

The advantages of the access bond facility are therefore unlimited deposits, convenience, you save interest on your home loan, all at no additional fees. All of this whilst at the same time, your home appreciates in value.

13 Sep 2023

FOLLOW UP ON RECENT PROPERTY CONDITION REPORT NEWSFLASH (MANDATORY DISCLOSURES)

We have received a number of questions, in response to our last post. Please familiarise yourselves with the Act once again. We have highlighted the vital parts:

Section 67 of the Act states the following:

(1) A property practitioner must —

(a) not accept a mandate unless the seller or lessor of the property has provided him or her with a fully completed and signed mandatory disclosure on the prescribed form; and

(b) provide a copy of the completed mandatory disclosure form to a prospective purchaser or lessee who intends to make an offer for the purchase or lease of a property.

(2) The completed mandatory disclosure form signed by all relevant parties must be attached to any agreement for the sale or lease of a
property, and forms an integral part of that agreement, but if such a disclosure form was not completed, signed or attached, the agreement must be interpreted as if no defects or deficiencies of the property were disclosed to the purchaser.

To therefore answer the questions, we have received (and applying the PPRA’s communication):

May an agent complete this on the seller’s/landlord’s behalf?

Yes. But the SELLER/LANDLORD must still sign it off. It is a declaration by him/her, not the agent.

Is there no way around this at all?

You could apply for exemption under Section 4 of the Act, but this is not practical at all as it would have to be for each and every such occasion.

May we amend the prescribed Mandatory Disclosure at all?

No. It must be used in its prescribed form. Do not change anything.

13 Sep 2023

PROPERTY CONDITION REPORTS – IS IT AT ALL “NEGOTIABLE”?

Since inception of the Property Practitioners’ Act, Property Practitioners have sought a solution to the following scenario:

You have an executor/curator/investment seller, who has no knowledge of the property’s condition at all, and who refuses to sign a property condition report. What now?

In the light of the history of this document (which was, to our knowledge, introduced by the former EAAB in order to protect agents against claims of non-disclosure), we have interpreted the Act to mean that if you are faced with a seller who is not willing to sign, for the above reasons, you could possibly use an addendum to address this, and still protect yourself.

Please note, we received correspondence from the PPRA yesterday, that in their view, the Property Condition Report serves to protect the consumer. Secondly, they also confirmed that Property Practitioners who do not comply, face the risk of disciplinary sanction without exception.

As such, and to finally answer the question that has been raised: If your seller does not want to sign off on the condition report, you may not market the property.

In the PPRA’s defence, sellers must simply be made aware of the fact, that these reports do not bind the seller in any manner at all. It is a declaration made to the best of the seller’s knowledge and belief. It does not amount to a warranty of any kind.

We therefore advise all Property Practitioners to turn down any mandates where the seller refuses to complete and sign such a report, with immediate effect. If you have a pending mandate, but no completed report, get one right away, or you will be forced to terminate the mandate.

There are no exceptions, it seems.

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