The Umbrella Group

What Was Getting a Bond 21 Years Ago Like?

For the writer, who became a co-home owner in 1992, no pleasures existed quite like those enjoyed by parents. Many who were privy to prime interest rates at an all time low of 5.50 percent in 1962. Instead were the realities of entering the property market just before prime escalated to an all time high of 25.50 percent in 1998.

However, the notion of ‘no pain no gain’ rang true as the size of the bond eventually shrunk as prime lending rates decreased, recorded to have averaged 12.55 percent between1957 to 2013. What also happens over time is the necessity to improve our family’s prime asset. As a result came the forfeiting of a bond free existence of several years. Considering uncertain economic times, borrowing money to pay for renovations has been a positive experience all round, the product of much obliging bank and bond originators.

Borrowing at 0.40% below prime at 8.10% made sense when comparing annual price escalations of building and related costs, to the time spent in accumulating sufficient cash flow to cover the costs of improvements. The re-paying of a newly registered bond as quickly as possible will be offset by added capital value as well as an improved lifestyle.

What the bank asked for

As reflected in the title deed of the property, both owners may apply for the new bond to be registered in both their names. However, for the purposes of re-payment of the bond, the highest earner becomes the primary bond applicant, also from whose account payments will be deducted.

In addition to identification, is proof of residence through utility bills, proof of income, and a copy of the title deed proving no outstanding debt to be attached to the existing asset.
In addition is proof required that both applicants reside at the same property related to the bond. Worth noting here is that municipal rates and tax bills should reflect both names of registered property owners.

Applicants are requested to supply recent monthly payslips or in the case of informal employment, statements of business accounts, and separate tax reference numbers and utility bills.

The process that followed

Documentation submitted against the bank’s checklist saw a speedy property evaluation by  the bank’s assessor. A 20 minute walk about, aided by the valuator’s access to digital information, based on the municipal valuation, enabled insurance calculations for replacement value of the property. Bond approval was communicated one week after application.

Acknowledgement of receipt from the bank’s conveyance firm resulted in the signing process two weeks later. A minimum of a one hour appointment allows working through the long list of documents, thoroughly communicated by legal professionals.

List of documents signed with conveyance attorneys

Indemnity by the borrower in favour of the bank.

Bank New Home Loan Agreement - worth noting here is life insurance is required for both bond applicants to cover loan amounts, as well as property insurance for replacement value.

Terms and Conditions of Loans Secured by Mortgage Bonds Over Freehold Property - covering access bond facilities, termination of contract, defaulting, data protection, etc.
A Quotation and Pre-agreement Statement – summarising all relevant costs.

A Continuing Covering Mortgage Bond - this secures the indebtedness of the mortgagor to the bank.

After signing above-mentioned documents and handing over original title deeds of the property, documentation was submitted to the central Deeds office, now awaiting registration within the next three weeks.

Most notable in the world of bond origination post 2008, is the protection both of banks and consumers against over indebtedness. Easy digital access and tracking of bond application information on widely available digital domains added to a positive experience, all round.

 Michael Otto

Nedbank