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How well do you know the A to Z of property terms?

Do you know your title deeds from your transfer duty? Or the difference between your net asset value and your gross income? Property, as with most professional industries, has a number of terms and concepts that are important to understand, but not necessarily part of everyday conversation.

The Leapfrog Property team has compiled the A to Z of useful property jargon.

Amortisation calculator

An amortisation calculator, also known as a loan calculator, calculates the estimated monthly loan repayments, including how much of the loan repayment goes towards the principal amount and how much towards the interest.
Bond Originator

A person or organisation that assists individuals in obtaining a bond at the most favourable interest rate. The service usually includes bond applications to all the major banks in South Africa.

Commission

The fees paid to a trusted property advisor as compensation for managing the transaction. The fees are often determined as a fixed percentage of the sale price of a property. But there are both low-commission and fixed-fee, as well as hybrid agencies.


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(Title) Deeds

Proof of a sealed deal! Title deeds serve as proof of property ownership. While a property is mortgaged the deeds are held by the lender and only once the property is paid off does it get transferred into the name of the property owner.


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Equity

A “fancy” term that rather plainly refers to the difference between the market value of a property and the amount still owed to the lender (bank) that holds the mortgage.

Foreclosure

Foreclosure happens when a homeowner can no longer afford the monthly bond repayments and the lender (bank) has to recover the balance of the loan by forcing the sale of the property.


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Gross Income

Gross income refers to the total amount of income an individual receives from all sources, before tax and other deductions.

Homeowners Insurance

This type of insurance covers the entire building. Homeowners need to ensure that the cover is sufficient enough to replace the building in the event of total destruction, for example a fire or earthquake.

Interest

Interest – most simply – refers to the cost of debt. It is a particular rate that is paid at regular intervals as compensation for the delay of a repayment of debt. Interest on a property can amount to more than the value of the property over the years, which is why paying extra into a mortgage is strongly advised.


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Joint Income

Simply, the combined gross income of all parties, such as spouses, intended on purchasing a property together.

Key Tenant

For a commercial development, the resident who attracts other residents. Think Spar, Game, Checkers, Pick n Pay.

Lease

The contract between a property owner (landlord) and a tenant. The contract specifies the time period, the payment amount, as well as the obligations of the parties.

Mortgage

Also known as a bond, it refers to the legal agreement whereby a bank (or similar financial institution) lends money to an individual or organisation in order to buy a property.

Net Asset Value

An individual or property’s net asset value is the total value of all assets less liabilities.

Offer to Purchase

A legally binding agreement between a buyer and a seller that outlines the terms and conditions of the purchase of a property.

Pre-approval

A buyer that has pre-approval already has a guarantee from the lender (usually a bank) that they are eligible for a home loan – this is subject to the bank’s valuation of the property. Pre-approval helps to increase your chances of having an offer on a property accepted, especially in a competitive housing market.

Qualified Buyer

A potential buyer (can be an individual or company) who is looking to purchase property and has proven to be in a financial position to do so, typically within a given price range. The strength of this “qualification” is determined by the financial institution that is likely to issue the mortgage.

Repayment Term

The term – amount of time – that the lender allows for the repayment of a mortgage loan, typically 20 or 25 years. In some cases a 30-year term can be negotiated.

Sole Mandate

A sole mandate is the agreement that only one agency is allowed to market and sell a property, giving them the mandate as such. The sole mandate instruction must specify the time, price and commission structure of the transaction, as well as any terms and conditions that apply to the mandate.

Transfer Duty

The tax levied in terms of the Transfer Duty Act on any immovable property that is acquired by transaction (purchase) or otherwise. The party liable for paying the transfer duty is the one that acquires property (the buyer). Transfer duty is payable to SARS.


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Utilities

Services provided by local government, such as water, electricity and refuse removal. Paid for via monthly levies and taxes.

Voetstoots

A term that means “as it stands” and well understood by South Africans as buying something with defects and all. It protects the seller and forewarns the buyer that action cannot be taken if something goes wrong with whatever is the subject of the transaction.

Will

It is always important to have a will, but especially so if you own a property. There are many legalities around what happens to a fixed asset when the owner or bondholder passes. To reduce the administration of that asset for your next-of-kin, be sure to seek professional advice in drafting a will and specifying what should happen to the property.

X-factor

The variable that differentiates a so-so property from a superb one! It could be a physical feature, the location, the price, or even the service the trusted property advisor gives.

Yield

Yield is the percentage return on an investment, which is classified as profit.

ZoningSilver Lakes home on the market for R8.4m through Pam Golding Properties resize

Zoning regulates which kinds of properties and structures can be used for which purposes within designated districts or zones. Zoning includes guidelines on the types of structures, building heights and density.

david.steynberg@gmail.com

David A Steynberg, managing editor and director of HomeTimes, has more than 10 years of experience as both a journalist and editor, having headed up Business Day’s HomeFront supplement, SAPOA’s range of four printed titles, digimags Asset in Africa and the South African Planning Institute’s official title, Planning Africa, as well as B2B titles, Building Africa and Water, Sewage & Effluent magazines. He began his career at Farmer’s Weekly magazine before moving on to People Magazine where he was awarded two Excellence Awards for Best Real Life feature as well as Writer of the Year runner-up. He is also a past fellow of the International Women’s Media Foundation.

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