1. Types of loans
                       
Cornerstone Home Loans assists with selecting the best loan option for a client’s requirements. There are a number of products available:

First time home loans
There are two first time home loan products that exist for clients between 21 and 35 years of age who are new to the property market. These options make owning a first home simple and affordable:
  • Option 1:This first time home loan is ideal for first time buyers who do not have sufficient funds to cover the property transfer and home loan registration costs and allows the client to register a home loan of up to 108% to cover these fees.
  • Option 2:Once the first time home loan has been registered, this option offers a three month breather period before installments are due.
Ordinary home loan
This is a flexible home loan option, tailor-made to suit individual requirements for the purchase of a residential property or to make improvements to an existing residential property.

Second or further loans
A second or further loan depends largely on the client being able to afford the increase in the monthly home loan installment. The banks are prepared to offer an increase on the existing loan where the property’s value has increased due to market conditions.

Investors who buy to let
These products are available to clients making residential property investments. Properties purchased in this manner are not intended for personal residence of the owner, but for letting purposes. A percentage of forecast rental income is taken into account, in conjunction with the owner’s total income, when determining the “Buy to Let” loan amount.

Building loans
Building loans are available to new or existing clients who plan to build a new residential property.

Access bonds
This facility is optional and needs to be requested on any home loan product. Access bonds allow clients the flexibility to pay more than the minimum monthly installment. The accumulated surplus funds reduce the outstanding balance, which provides the client savings in interest. If required, the client may access the surplus funds at any stage.

Switching home loans
Many of Cornerstone Home Loans’ clients have realised the benefits of working through a bond originator and have opted to switch existing home loans in order to obtain better interest rates. The process of switching home loans is not a complicated alternative and the long-term cost savings far out-weigh the time needed to complete the required documentation and supporting documentation. 

One of Cornerstone’s financial property consultants will gladly assist and guide you throughout the bond registration process.
2. Types of buyers

Registering a property in an individual’s name or jointly with another individual is certainly the most common method of owning a property. Other alternatives include registering a property as a legal entity, including a Company, Closed Corporation or a Trust.

The South African Revenue Services previously charged legal entities 1% transfer duties, which have since risen to 10%. Due to the increase, property owners no longer find the registration of a property as a legal entity an attractive one. However, a legal entity certainly provides other advantages, including estate planning and multi-owner benefits, which are not available with an individual or joint registration.

Proper legal and tax implications should be investigated with an attorney and tax consultant prior to registering a home loan to ensure the correct registration is lodged.
3. Supporting documentation

Private application
  • Fully completed generic application form (available from Cornerstone Home Loans)
  • Breakdown of assets and liabilities
  • Summarised income and expenditure
  • Identity document for all applicants
  • Proof of income for all applicants
  • Three months bank statements for all applicants
  • Offer to purchase
  • Proof of residential address
Private Close Corporation application
  • Fully complete generic application form (available from Cornerstone Home Loans)
  • Breakdown of assets and liabilities
  • Summarised income and expenditure
  • Identity documents for all applicants
  • Proof of income for all applicants
  • Three months bank statements for all applicants
  • Financial statements-Audited
  • Close Corporation CK1 and CK2 Documents
  • Offer to purchase
Company application
  • Fully completed generic application form (available from Cornerstone Home Loans)
  • Breakdown of assets and liabilities
  • Summarised income and expenditure
  • Identity documents for all Directors
  • Proof of income fro all Directors
  • Three months bank statements for all Directors
  • Audited financial statements
  • Offer to purchase
  • Company registration documents
Trust application
  • Fully complete generic application form (available from Cornerstone Home Loans)
  • Breakdown of assets and liabilities
  • Summarised income and expenditure
  • Identity documents for all trustees (as per resolutions)
  • Proof of income for all trustees (as per resolution)
  • Three months bank statements for all trustees
  • Copy of the Trust document and Master Certificate
  • Audited financial statements
  • Offer to purchase
Pre-approval
  • Identity documents for all applicants
  • Proof of income for all applicants
  • Three months bank statements for all applicants
  • Proof of residential address
4. Interest rates


Interest rates are normally structured on a variable basis, which is determined by the fluctuations of the prime lending interest rate. Fluctuations in the prime interest rate, would automatically result in an increase or decrease in the client’s monthly repayments.

Types of interest
Against the backdrop of the volatility of the market conditions and considering the client’s risk profile, a Cornerstone Home Loans’ financial specialist may
recommend other interest rate options.
  • Variable – flexible interest rate, which fluctuates with the market
  • Fixed – an interest rate, which is fixed over a specific period of time, usually 12 months, where the market’s fluctuations, either positive or negative, will not
    affect the pre-determined interest rate.
  • Flexi-fixed – an interest rate which is fixed over a three month period and then reverts to variable.
  • Capped – an interest rate that is capped at a specific interest rate, if the market fluctuations results in the interest rate exceeding the pre-determined capped rate, the interest rate will remain at the capped rate. Where the interest rate decreases below the capped rate, the client will benefit from the reduced monthly re-payment amount.
Calculate
An individual’s monthly home loan repayment is calculated at 30% of the household’s gross monthly income. Use the table below to calculate an approximate monthly repayment of a home loan. Simply multiply the loan amount with the applicable factor and divide by 1000.
  • Repayments - If a home loan is required for R300 000 at 13% interest over 20 years, the factor will be 11.72. Multiply R300 000 x 11.72 and divide by 1000, which amounts to R3 516 per month.
  • Required monthly income – Repayment x 30%. R3 516 ×100 ÷ 30 (30%) = R11 720 per month
  • Maximum bond - Repayment ÷ factor × 1 000. R3 516 ÷ 11.72 × 1000 = R300 000
  Interest rate Monthly repayment per R1 000
- over 5 years -

Monthly repayment per R1 000
- over 10 years - 		Monthly repayment per R1 000
- over 15 years - 		Monthly repayment per R1 000
- over 20 years - 		Monthly repayment per R1 000
- over 25 years - 		Monthly repayment per R1 000
- over 30 years -

7.5%

20.04

11.87

9.27

8.06

7.39

6.99

7.75%

20.16

12.00

9.41

8.21

7.55

7.16

8.00%

20.28

12.13

9.56

8.36

7.72

7.34

8.25%

20.40

12.27

9.70

8.52

7.88

7.51

8.50%

20.52

12.40

9.85

8.68

8.05

7.69

8.75%

20.64

12.53

9.99

8.84

8.22

7.87

9.00%

20.76

12.67

10.14

9.00

8.39

8.05

9.25%

20.88

12.80

10.29

9.16

8.56

8.23

9.50%

21.00

12.94

10.44

9.32

874

841

9.75%

21.12

13.08

10.59

9.49

8.91

8.59

10.00%

21.25

13.22

10.75

9.65

9.09

8.78

10.25%

21.37

13.35

10.90

9.82

9.26

8.96

10.50%

21.49

13.49

11.05

9.98

9.44

9.15

10.75%

21.62

13.63

11.21

10.15

9.62

9.33

11.00%

21.74

13.78

11.37

10.32

9.80

9.52

11.25%

21.87

13.92

11.52

10.49

9.98

9.71

11.50%

21.99

14.06

11.68

10.66

10.16

9.90

11.75%

22.12

14.20

11.84

10.84

10.35

10.09

12.00%

22.24

14.35

12.00

11.01

10.53

10.29

12.25%

22.37

14.49

12.16

11.19

10.72

10.48

12.50%

22.50

14.64

12.33

11.36

10.90

10.67

12.75%

22.63

14.78

12.49

11.54

11.09

10.87

13.00%

22.75

14.93

12.65

11.72

11.28

11.06

13.25%

22.88

15.08

12.82

11.89

11.47

11.26

13.50%

23.00

15.23

12.98

1207

11.66

11.45

13.75%

23.14

15.38

13.15

12.25

11.85

11.65

14.00%

23.27

15.53

13.32

12.44

12.04

11.85

14.25%

23.40

15.68

13.49

12.62

12..23

12.05

14.50%

23.53

15.83

13.66

12.80

12.42

12.25

14.75%

23.66

15.98

13.83

12.98

12.61

12.44

15.00%

23.79

16.13

14.00

13.17

12.81

12.64

15.25%

23.92

16.29

14.17

13.35

13.00

12.84

15.50%

24.05

16.44

14.34

13.54

13.20

13.05
* Source: Nedbank Property Forum

5. Buying process

The process of buying a new home is one of the most exciting investments of your life, but the experience is often dampened with complications and tedious legalities. Cornerstone Home Loans partners with its clients to guide and assist them throughout the financing, registration and transferal processes to ensure that the experience is simple and enjoyable every step of the way.

The entire process from signing the offer to purchase to the new bond registration and property transfer usually takes aproximately three months and can be divided into the following phases:

Home buying

i.   Find out what you can afford?
Start by applying for a pre-approval. This uncomplicated process indicates the loan size that the banks would be prepared to finance. This figure will work as a good guideline during your house-hunting expedition.
ii.   Start house hunting
Check the location of the house in terms of its proximity to schools, shops and other recreational activities as well as the selling prices of other homes in the area. Find out if any further development is planned for the area that may influence the value of the property.
iii.   Perform a quality check
Once you have found a house that suits your needs, do a quality check on its foundations, roof, plumbing, quality and workmanship etc.
iv.   Sign an offer to purchase
An offer to purchase is usually supplied by the seller (or estate agent). Make sure to read and check all of its contents including any terms and conditions relating to the sale.

Financing

i.   Contact Cornerstone Home Loans
A financial property consultant will discuss your financing requirements, the available products and the most suitable home loan option. Banking preferences are also discussed.
ii.   Rate concession
On the basis of basic information, Cornerstone will request a rate concession from the banks. The banks will be able to indicate an expected interest rate, type of loan and the size of the loan amount, which the banks would be prepared to finance.
iii.   Negotiation of interest rate
Based on the banks’ rate concessions, Cornerstone will negotiate the best interest rate on your behalf. The outcome of the negotiations will be discussed with you and a bank will be selected.
iv.   Application and documentation
Complete the generic application form and accumulate the required supporting documentation. Return all the information along with the offer to purchase to Cornerstone Home Loans. Representatives will gladly assist with the completion of the documents.
v.   Submission of application and approval in principle
Cornerstone submits all documentation to the bank for the application for the home loan. The bank issues an approval in principle, which usually takes aproximately 48 hours.
vi.   Valuation of Property
The bank will allocate an assessor to establish the value of the property.
vii.   Granting of loan
Within five days, the bank will confirm with Cornerstone that the loan has been granted.


Registration and transfer

i.   Transfer attorney
The seller appoints a transferring attorney, which will undertake the transferal of ownership into the client’s or legal entity’s name.
ii.   Bond Registration attorney
The buyer appoints a registration attorney to prepare a mortgage bond contract and to register it with the Deeds Office.
iii.   All the required documents need to be signed at the attorney’s offices
iv.   Transfer and bond registration costs are settled. Should the loan amount exceed R200 000 and if the client has utilised Cornerstone’s registration attorneys, Cornerstone will pay for the bond registration fee, offering the client a significant saving.
v.   Deeds Office
Cornerstone Home Loans will advise the client once the property has been registered.
vi.   Bank confirmation
The bank will provide written confirmation that the bond is registered, the monthly home loan re-payment amount and date of monthly installments.
vii.   Congratulations and happy house warming!




  What are the costs involved in utilising a bond originator?

What savings can I expect from using the services of a bond originator?

Does Cornerstone utilise any other bond originators to provide its services?

What costs can I expect to incur during the property/home purchasing process?

What are the typical checklist points that I should consider before buying a property?

Are sellers legally required to disclose any defects on the house that could influence a decision to buy?

If a house in the market has electrical problems, who is responsible for the associated costs?

What is the difference between a freehold property and a sectional-title unit?

If a property’s registration at the Deeds Office is complete, but the seller still resides in the house, when can occupational rent be charged and how much?