Buying property is a big decision and expense, and can be complicated if you don’t know what’s what. Scorpion explains the terms you need to know.

Before you can even consider the type of house you would like to purchase, you will need to do an affordability assessment with the bank. This is an assessment of your ability to afford monthly instalments based on your income, and will result in the bank giving you what is called an “affordability score”.

If your score qualifies you for a home loan, you will need to know the following terms:

• Administration fee – the fee charged by a bank to cover the initial costs of processing a home loan application.
• Agent’s commission – the amount payable by the seller for the work done on marketing and selling a property if the seller goes through an estate agency.
• Appraisal fee – the fee charged by an appraiser when producing an estimate of the market value for a property.
• Initiation fee – another fee charged by the bank to cover the initial costs of processing a home loan application.
• Pre-approval – the pre-approval process involves a potential lender or bank reviewing an individual's finances, including their income, assets, and credit history, to determine how much money can likely be borrowed.
• Offer to purchase – the document setting out the proposed purchase price and conditions on which a buyer is prepared to purchase a property. If the seller accepts and signs it, the offer to purchase becomes a valid sale agreement.

When you are ready to buy, you will need to be familiar with:

• Agreement of sale – this is the basic contract of sale and purchase between a willing seller and buyer, and it supersedes all previous verbal agreements. It is a legally binding document signed by both parties in which they agree on a purchase price, sale conditions and date of sale.
• Clearance certificate – a document issued by the local municipality to confirm that all rates, taxes and levies are paid up to date when a property transfer takes place. Transfer cannot take place without it.

Once the offer to purchase has been submitted, you should know:

• Conveyancer – a specialist attorney who has qualified as a conveyancer and can attend to deed office transactions such as the transfer of a property from seller to buyer and the registration of mortgage bonds and servitudes.
• Deed of sale – a formal document and a record of the transfer of ownership of property from one person to another, outlining the terms of the agreement.

Scorpion’s can help with purchase and sale agreements and any concerns you may have surrounding these. Need help? Click here.

NB: Scorpion can offer advice, but does not deal with conveyancing matters. You will need to hire your own conveyancer to handle your property transaction.

You may also be interested in:
Previous owners won’t move out
Buying an RDP house
How to get rid of bad tenants

* This is only basic legal advice and cannot be relied on solely. The information is correct at the time of being sent to publishing.