The conclusion of every sale depends to a large extent on the purchaser’s ability to finance the purchase of the property. Although there are numerous variations in the methods used, the ones you will encounter most often are:
- Cash transactions
- Part cash, part mortgage bond transactions; and
- 100% mortgage bond transactions
- Cash transactions
This means that the purchaser has enough cash available to pay the full purchase price plus costs. They don’t need a home loan and they don’t need to sell another property. This is the ideal purchaser.
However, you need to make sure that they do have the cash, and that they know when it must be available. When qualifying this purchaser, find out:
- how the money is invested e.g. in fixed deposits, and
- how much notice must be given to release it.
Using an estimate of how long the transfer will take, the practitioner must agree with the purchaser the approximate date when they must be able to pay the purchase price over to the conveyancer.
- Part cash/part mortgage bond transaction
This is the most common method of payment. The purchaser has a certain amount of cash available and qualifies for a home loan to make up the difference. Commonly, the cash available is used to pay the deposit and some or all of the costs, and the home loan is used for the balance.
- 100% mortgage bond transaction
This means that the purchaser has no cash and is wholly dependent on a home loan to pay for the property.
