With the majority of homes in South Africa being financed by the country’s largest banks, a common online debate persists: who truly owns a mortgaged home?
Some believe that the bank holds ownership, but the reality centers around two key factors:
- The authority you assume once the bond is registered in your name; and
- The importance of the title deed.
As a homeowner, decisions regarding your property are yours to make, not the bank’s. You control choices such as renovations, extensions, décor, landscaping, leasing, or selling. You’re also responsible for maintenance and repairs.
If you decide to sell the property, the proceeds will first go towards paying off any outstanding balance on your home loan, and any remaining amount will be your profit.
The title deed plays a crucial role in proving homeownership. The person whose name appears on the title deed is the legally recognized owner, which can be verified through the Deeds Office. While your name appears on the deed as the official owner, the bank’s name is also listed—not as the owner but as the holder of the mortgage bond. Homeowners only receive the physical title deed after the home loan is fully repaid, and until then, the bank retains possession of it.
Currently, 69% of South African homes are still bank-financed, according to the latest data from Lightstone. Despite the bond, purchasing a property qualifies you as a homeowner, whether or not it’s financed.
What is a Title Deed?
A title deed is a vital legal document that establishes property ownership. After buying a property, a conveyancing attorney is tasked with transferring the title deed to your name. The associated transfer fees are paid by you, and this process usually takes around three months after your home loan approval.
Following bond registration and transfer, the title deed is officially recorded at the Deeds Office. The title deed contains essential information, such as the buyer’s personal details, property description, purchase price, and any limitations on future sales, like an existing home loan. It also includes a Deeds Registry Office seal as confirmation of ownership.
In cases of joint ownership, which is increasingly common, the title deed outlines each person’s share of the property.
What Happens if I Default on My Repayments?
The question of “who owns your home” often arises due to confusion about the repossession process. While it’s true that a bank can repossess your home if you default on loan repayments, this is generally a last resort.
Homeowners facing financial difficulty have several options to avoid repossession, including:
- Rescheduling or restructuring debt
- Renegotiating the loan term
- Requesting a payment holiday
- Modifying the repayment agreement
- Selling the home
- Utilizing credit insurance
Many homeowners are unaware that municipalities can also foreclose and sell your home if you repeatedly default on rates and taxes. Similarly, a Body Corporate can act if levies remain unpaid in sectional title properties.
Though repossession is a lengthy process, and banks are not the only entities that can initiate it, homeowners can safeguard their assets by consistently paying all installments and fees on time and maintaining financial stability.
This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE).