Borrowing

Property types

Before you rush out and buy the first home you can afford, find out what your options are. Absa offers mortgages for several different types of homeownership.

Full title ownership (freehold ownership)

Absa offers loans for freehold ownership at flexible terms of up to 30 years.

With full title ownership, you receive title to the property and your ownership is registered at the deeds office. You have full ownership of your property and can do what you want with it, as long as you don’t contravene the municipal regulations. You can sell it, rent it out or paint it shocking pink if you choose. 

But as the owner, you are solely responsible for paying the rates, services such as water, sewerage, refuse removal and electricity, and for maintaining the property.

Types of freehold property:

  • House: a normal free-standing house on a property with an ERF number
  • Cluster house: a development of similar houses with limited access through security control. Each house is individually owned and owners are not charged a levy
  • Residential property used for business: if no structural changes have been made to the house, it is a residential property. However, if more than half of the property is used to run a business, a risk premium is charged
  • Smallholding: a property no bigger than 20 hectares, situated within a 150 km radius of a built-up area and able to be connected to local authority water or with a borehole. There must be a dwelling on it and the household’s major source of income must not be from farming the property
Sectional title ownership

Absa offers loans for sectional title ownership at flexible terms of up to 30 years.

With this type of property ownership you own more than your personal living space; you also become a part-owner of the bigger shared property. You could also be given exclusive use of part of the shared property, such as a garden, a yard, a balcony or a parking bay. 

As a unit owner, you are automatically a member of the body corporate, which is responsible for administering and maintaining the shared property. You can also seek election onto the board of trustees, which manages the complex.

The rates and taxes, insurance, maintenance costs and lights and water are paid out of a central fund. All owners contribute to this through a monthly levy. The body corporate may also raise a special levy from time to time for maintaining or renovating the complex.

Types of sectional title property:

  • Mini subtype house: these are small, sub-divided portions of a large property that is suitable for cluster housing developments
  • Semi-detached house or duet: this consists of two houses attached to one another, either on separate stands and bonded individually or on one stand and bonded together under one bond. They can be sold as separate units in a sectional title development
  • Townhouse, apartment or flat: These must be in an approved sectional title complex and the complex may only have residential units

Things to consider before buying a sectional title:

  • Make sure the body corporate will be able to meet any financial obligations that might arise
  • Find out what the monthly levy is, how it is made up, when it was last increased and whether a special levy will be needed in the near future
  • Read the scheme rules and look for any rules that change your liability for levies or create exclusive use rights
  • Check the amount and type of insurance cover and the current insurance replacement value for the unit
Buying directly from a developer

When you buy from a developer you buy your unit off-plan. This means your unit has not been built yet and you can only move in once it is complete. As such, you must be aware of what is included and excluded before you buy. You will need to pay a deposit to secure your unit, but you won’t have to pay transfer duty, because the developer has to pay VAT.

Things to consider before buying from a developer:

  • View the development plan and find out what the timescale for completion is
  • Ask about future development phases - you may be able to change aspects of the interior decorating
  • Check the developer’s credentials and track record before making a commitment to buy a unit
  • Check that the developer is using a reputable builder
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