THERE IS ANOTHER WAY TO FINANCE YOUR HOME
Finance your home through instalment sale instead.
What is instalment sale home finance?
Are you struggling to get a home loan? Today’s climate has made it difficult to obtain bond finance. Why not buy your home like you do your car – on instalment sale? Sentinel Homes is an alternative home financier to banks and other home loan providers serving the Western Cape, Gauteng, eThekwini (Durban metropolitan area), Nelson Mandela Bay (Gqeberha and Kariega metropolitan area), Mangaung (Bloemfontein metropolitan area) and Buffalo City (East London metropolitan area).
We serve creditworthy consumers who can afford the finance we offer. We are not aimed specifically at clients who have poor payment histories or who simply cannot afford a home loan they want when considering their verifiable income and expenses.
We have found that we are most competitive for those applicants who are self-employed, who earn commission or other variable forms of income, those who are employed on the internet or on a contract basis, foreign workers living and working in South Africa, South Africans working overseas, those employed in the gig economy or freelancers, and similar categories of applicants. Our clients typically would have been good tenants were it not for our finance allowing them to buy a home instead.
If you are applying for a home loan directly from the banks or through a bond originator, it costs you nothing to apply with us as well, since we require all the same documents and information. We urge you to do so, but especially if you are not getting the bond offers you expected.
You buy a house like you normally would: by finding one you will be able to afford and signing an offer to purchase. If your offer is accepted, you can apply to the normal financiers, such as banks, for a mortgage loan. If you do not qualify for the mortgage loan you require, then Sentinel Homes can help. Your mortgage broker or estate agent will send your application to our applications office for consideration. If approved, the process continues to the point where you move into your new house and the transfer is registered in the deeds office. Practically, there will be little difference from buying a house with bond finance, as you will still make monthly payments and live in your home.Apply Now
The difference is a legal one and relates to the process that is followed on default. There is little practical difference as long as you pay the instalments and comply with the loan agreement.
When you finance a house with bond finance, the house is registered into your name but the bank holds power over it through a legal instrument called a mortgage bond. If you sell your house, you cannot do it without first paying the bank. The bank can also insist that your house is insured, can repossess your house if you decline to pay the instalment, and has some other minor rights as well. Legally speaking, your name is on the title deed, together with the bank’s name, as holders of rights over the property.
In the case of instalment sale, your name will also appear on the title deed as a holder of rights over the property. The difference is that Sentinel Homes is legally the registered owner of the property until you have paid the final instalment.
As long as you continue to make payments of the instalments and comply with your other obligations in terms of the loan agreement, there will be virtually no practical difference from bond finance as you will still make monthly payments and live in your home.Apply Now
- The market value of the residential property must be above R400 000;
- The total finance granted must not exceed R2.9 million;
- The home must be located in the Western Cape, Gauteng, eThekwini (Durban metropolitan area), Nelson Mandela Bay (Gqeberha and Kariega metropolitan area), Mangaung (Bloemfontein metropolitan area) or Buffalo City (East London metropolitan area). This includes Estate agents and Bond originators;
- A minimum deposit of 5% of the purchase price is required;
- You should have a good credit record, without judgments or adverse accounts.
The costs involved are typically the same as when buying a property with bond finance. These costs include, but are not limited to, a deposit, transfer costs, transfer duty and insurance.
Finance is provided at competitive interest rates. A detailed quotation will be provided should your application be successful.Apply Now
What if I lose my job, become ill, pass away, or for some other unexpected reason cannot pay my instalment?
We encourage all our clients to take comprehensive insurance to ensure that the home finance is paid in the case of an unexpected life event. We offer some of these insurance products as a part of our finance offering, though you are free to take the insurance elsewhere. In instances where the insurance cover does not apply or is not sufficient, then an arrangement will have to be made with Sentinel Homes, which may include selling the home, settling the finance and paying the remainder over to you. This is also what would have happened with bond finance.Apply Now
By taking finance from Sentinel Homes you promise to look after and take care of your home much as you would promise with bond finance. You are free to sell your house at any time before the finance is repaid, as long as your selling price is large enough to cover your outstanding debt with Sentinel Homes. Bond finance works the same.
Instalment sale does differ from bond finance in some small and technical respects. Most noticeably, you will have to use the property as your primary residence unless you have our consent to rent it out.Apply Now
Housing finance in South Africa is regulated. In the case of instalment sale, there is an additional law that applies to the finance called the Alienation of Land Act. The Act does not apply to bond finance and provides additional safeguards for people who take instalment finance for their house. Even in the unlikely event of Sentinel Homes becoming bankrupt, which is the most extreme possible outcome, the law insists that you will be safe in your home as long as you continue to abide by the terms of the loan agreement and pay the monthly instalment.
Sentinel Homes is financed by the large South African financial institutions, who perform stringent financial checks before providing that finance. The chance of something happening to Sentinel Homes is therefore remote.Apply Now
We are the first South African company to offer an alternative to bond finance in the open market. The company is the brainchild of the team at Combined Finance, which has been operating in as investors and financiers in the real estate industry since 2013.