South Africa: Mortgage notes

Guidance notes for purchasing a property in South Africa

1) Please ensure that you will have full title to the property on completion and that the appropriate documents are available for the lender.

2) With new (off-plan and plan) properties, find out the date the property will be registered in your name(s), as the lender cannot lend on the security of the property until it has been registered.

3) Whilst all reasonable steps will be taken to secure the loan on your overseas property as soon as possible, delays may occur due to the South African legal and administration system.

4) Check with the estate agent/lawyer that you are aware of the costs charged by the legal & government authorities for purchasing a South African property, noting that the lender will have their own legal costs for assigning the loan (the cost of which they will normally advise when they issue the mortgage offer).

5) It is essential that you take the appropriate independent legal advice before signing the sales contract or paying a deposit, if purchasing a foreign property, as would be expected if you were purchasing in your own country. The bank will require a copy of this document to be forwarded with the relevant application form. However you are able to sign this contract with the clause “subject to mortgage finance” as the contract, once signed is legally binding.

6) Please be aware that the Lawyer/Notary may be incorporating within his charges, costs for assigning the mortgage and you should establish with the Lawyer/Notary the actual cost before proceeding with a loan application

7) It is advisable to arrange your mortgage finance before agreeing to purchase a property.

8) A South African bank is required or a nominee bank account although not advisable unless direct relation.

9) All loans are offered in Rand only

10) All mortgages should have a suitable life assurance policy assigned to them. It is not mandatory but strongly advisable.

11) Properties can be purchased individually, in joint names, partnerships as well as through Limited Companies and Closed Corporations (CC’s). Please note an Offer to Purchase (OTP) on a property needs to be signed in the name of the legal entity the purchaser is buying through and Limited Companies need to be set up prior to signing the OTP.

© Conti Financial Services Limited 2006

This article is reproduced with the kind permission of Conti Financial Services Limited.

For information and advice on overseas mortgages and residential finance in over 30 countries, contact Conti Financial Services Ltd on +44 (0)1273 772 811 www.mortgagesoverseas.com