Guide To Mortgage Bonds For South Africans

Aug. 19, 2010 - PRLog -- INTRODUCTION

A creditor who advances money to a debtor usually requires the debtor to provide some form of security for the repayment of the debt. Two main forms of security can be distinguished, namely:

Personal security: An individual can bind himself/herself personally as surety for the repayment of another’s debt in the event of non-payment by the debtor himself. Should the debtor not pay, the surety will be called upon to pay on behalf of the debtor.

Real security: A borrower (Mortgagor) can offer his immovable property to a lender (Mortgagee) as security for the repayment of a debt. The Mortgagee (normally a bank) will cause a mortgage bond to be registered over the immovable property as security for the fulfilment of the Mortgagor’s obligations.

WHO IS THE MORTGAGOR AND WHO IS THE MORTGAGEE?

The Mortgagor is the individual, company, close corporation, partnership or trust who has borrowed money to finance the purchase of an immovable property and mortgages his/her property as security for repayment of the loan.

The Mortgagee is the Bank, Financial institution, employer or individual who lends the money to the Mortgagor and in whose favour the mortgage bond is registered.

WHAT IS A MORTGAGE BOND?

A mortgage bond is based on an agreement in terms of which the Mortgagor borrows money from the Mortgagee and aggresses to pass a mortgage bond over a specific immovable property in favour of the Mortgagee as security to the Mortgagee for the repayment of money.

WHAT PROPERTY IS CAPABLE OF BEING MORTGAGED?

All immovable property, improved or unimproved, which is registerable in a Deeds Office can be mortgaged. This includes a flat as well, if it is held under sectional title and is owned by the Mortgagor.

WHAT ARE THE CONSEQUENCES OF FAILURE TO PAY INSTALMENTS?

Foreclosure is the term describing the procedure followed in this event, if the Mortgagor fails to fulfil his/her obligations towards the Mortgagee, the latter can enforce his/her rights against the Mortgagor by calling up the bond and obtaining a Court Order which authorizes a sale in execution after due notice has been given to the Mortgagor. A Bank therefore cannot immediately cause a property to be sold in execution merely because a Mortgagor failed to pay an instalment.

WHAT IS THE “ADDITIONAL SUM” AS PRESCRIBED IN THE MORTGAGE BOND?

The mortgage bond secures not only the principal obligation of the debtor, but also ancillary expenses which the Mortgagor may incur in respect of the property such as insurance, maintenance expenses, the legal cost of pursuing the claim and arrear interest. Thus in a bond document provision is made for an “additional sum” over and above the amount borrowed, being the amount intended to cover the aforementioned items in the event of the Mortgagee having to foreclose on the bond.

By choosing Mortgage Plus for a mortgage bond, you will get that continual service to make sure you are getting the best deal possible.

CONTACT US

Speak to a home loan consultant about financing your new property or reviewing your existing mortgage. We are able to assist in lowering your bond repayments and securing attorney discounts.

Call us on 011.327.4489

http://www.mortgagepluscc.co.za

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Mortgage Plus Bond Originators specialises in Mortgages, Bonds, New Home Loans, Building Loans, Further Loans, Bond Switches and Debt Consolidation Home Loans, Personal Loans and Insurance in South Africa.
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