Those who lack savings but want to buy a home
for themselves should seriously consider the advantages of bringing in a
partner or partners to be joint bondholders. This ‘alternative’ means of
securing a bond is not frowned on or discouraged by the banks and these days is
increasingly used because people are cash-strapped.
Those who lack savings but want to buy a home
for themselves should seriously consider the advantages of bringing in a
partner or partners to be joint bondholders.
This is according to Mike van Alphen,
National Manager of the Rawson
Property Group’s bond origination division, who says the banks actually quite
like having joint bond debtors as this, it has been found, reduces their
chances of being let down on the bond payments.
He says they will in these arrangements take
into account the joint incomes of all who apply for the bond and this will in
many cases help those who are actually going to live in the home to upgrade and
move into a property better than they would normally have been able to afford.
Van Alphen says this is increasingly used by
couples or friends who agree to live together, either because it is convenient
and inexpensive or because they are now in a relationship but not yet married.
When joint applications for bonds of this
kind are approved by the banks, those who are signatories to the arrangement
are always assumed to be equal shareholders in the property. If this is not the
case (e.g. if one partner has 50 percent of the property and the other two 25
percent), the exact shareholding of each has by law to be stated in the Deed of
Sale and will be registered as such at the Deeds Office.
Furthermore, it should be realised by those
entering into such agreement that joint bondholders by law have to accept that
they are responsible for the total monthly bond payments. If one of their
partners defaults on his monthly payments the others can and will be held
responsible for covering the amount owing in addition to the sum that they
themselves have to pay in.
Van Alphen says quite often, one of the
partners/joint bondholders will at some stage want to sell his share, possibly
because he or she is getting married or going overseas. In many partnership
deeds there are stipulations that this will be done after a specified period of
years, but often, an option is left for the joint owner to continue as a
partner.
If the property as a whole is not being sold,
a valuer or a professional estate agent will have to be brought in to
estimate its value at the time the share is being sold. The partners now taking
over that share will be responsible for paying the transfer duty on it as well
as any outstanding rates and taxes accrued by the property.
“For example, if a share in a property worth
R1.8 million with three partners is sold right now, the transfer duty would be
R61 000. A third of this is R20 333. The remaining shareholders would have to
pay this to legalise their taking over of the sold share.”
He says many joint buying agreements of this
kind, are now operating in the buy-to-let market and have played a significant
role in bringing more properties onto the market for renting purposes.
Taken from Nedbank letter.
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