How It Works

Step 1 : Apply for a bond

a) Buyer applies for a bond.


b) Bond-A-Property (B-A-P) will then assess and approve or decline the application.


c) Once approved, the buyer will receive a quotation with the amount that he/she is approved for. If the option to just monthly pay interest was chosen, the borrower will need to settle the bond after the 10 years has expired. He/she can however negotiate a new loan, sell the property or get a bond from a bank.

 

d) On acceptance of the quotation, the following will occur:


  • i. The buyer will pay his/her fee of R7 500 (can be paid in 1,2 or 3 instalments)
  • ii. The fee will be utilized as follows
  • Set up of (Pty) ltd
  • Set up of trust
  • Contracts
  • Admin Fee

  • You may ask why a company and trust? The reason for that is that although the property will be registered in the company's name, the Buyer will be the director and 100 % shareholder in the (Pty) Ltd so he/she will have control of the property. This means that he/she can deal with the property any way preferred. The Buyer can sell it at anytime with all the profits to his/her account. There will be certain advantages that will be pointed out later.


    We also need to point out that the transfer fees for registering property in companies has been drastically reduced by the Minister of Finance. Transfer duty is as follows:


    R0 - R600 000: Zero
    R600 001 - R1000 000: 3%
    R1 000 001 - R1 500 000: R12 000 + 5%
    Above R1 500 000: R37 000 + 8%

    We need to register the property in the name of a (Pty) Ltd in order to operate legally outside the NCA.


    By registering property in the name of a (Pty) Ltd, the Lender can take a session over the shares, therefore affording him more security over the money he/she is lending.


    The purpose of the Trust is to protect the Buyer/Borrower from creditors. Placing the shares of the company into a trust, of which the buyer and his/her family is the beneficiaries, protects the property in the event of something happening to the buyer in his/her personal capacity.


    Also, should the buyer pass away, the property won't have to go into his/her estate leaving the family, who stays behind, destitute. The term "Blacklisted" has a very broad description. To be Blacklisted does not necessarily mean that you have a judgment against your name. It can be any of the above-mentioned scenarios and therefore being blacklisted doesn't cause you to be a bad person and doesn't mean that you won't pay your accounts either.


    For this reason Bond-A-Property has a scheme whereby we will assist persons, who are blacklisted, in getting a bond A great advantage of registering the property into the name of a company is that, when the buyer wants to sell the property someday, interest paid can be deducted from the profit made, constituting less capital gains tax to be paid by the buyer.


    Step 2: Setting up the company and trust

    Step 2 consists of setting up of the company and trust and getting all paper work in order.


    Step 3: Finding a lender

    Once all paperwork is finalised, Bond-A-Property will proceed to find a suitable lender supplying the funds for the requested bond. Bond-A-Property at no time guarantees that they will indeed find a suitable lender also not how long it will take.Bond-A-Property will utilize all kind of resources possible in finding lenders e.g. adverts on radio stations, adverts in printed media, internet adverts, Facebook to only name a few.


    Step 4: Loan Agreement

    Once a lender was found to fund the bond, B-A-P will enter into a loan agreement with the lender.


    Step 5: Buyer's Letter

    On completion of the loan agreement, the buyer will be issued a buyers letter confirming the amount he/she can buy for as well as verifying that a bond is in place and approved. The buyer can therefore sign an offer to purchase in the name of the company with the confidence that a bond is in place.


    For the lender

     

    Step 1: Set up (Pty) Ltd and trust

    Why (Pty) ltd and Trust?

    The loan should be registered in a (Pty) Ltd in order to operate legally outside the NCA. The (Pty) Ltd will be the bondholder of the property the borrower is buying. The lender will be a shareholder in the company. In the event of 2 or 3 lenders needed to get the full bond amount required, the shares will be dived.


    Example:

    A bond of R800 000 is required. Lender A has R300 000 and lender B has R500 000. Lender A will have share holding of 37,5% and Lender B 62,5%. Both lenders will be Directors of the company with loan accounts equal to their individual amount lent.


    The purpose of the Trusts is to ensure continuity in the event of the lender passing away. His/her shares in the company are placed in a Trust in order for the bond and outstanding interest not to form part of his/her estate.


    Step 2: Loan Agreement

    The loan agreement and session of shares are signed and all documents being prepared.


    Step 3: Transfer Attorneys

    The funds are being transferred to the Transfer Attorneys.


    Step 4

    The transferring process commences. Upon completion the attorney receives the mortgage bond deeds for safe keeping.