A recent case in the residential property sector of the Western Cape has shown just how powerful the new National Credit Act is and how closely the banks have to adhere to it.
An applicant for a bond valued at R 950,000 was granted this and then signed to buy the home in question.
However, before he could take transfer he went out and bought a new car. This extended his debt to the point where the bank's credit bureau deemed it too high - and they promptly cancelled the bond (as they are entitled to do in these circumstances).
Points to remember:
1. In buying from a private owner there is usually a three to six month delay and any running up of extra credit during that time could lead to a bond being withdrawn.
2. When it comes to buying off plan from a developer, it can take anything from six to 24 months to take transfer of the property. Here again any overstepping of the credit line during this period could cause the bank to hold back the bond.
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