FAQ
Frequently Asked Questions
What is equity?
What is equity?
For commercial investment property transactions, there is a loan portion and a portion that the investor provides in the form of cash. The days of receiving 100% loans are long gone. Instead, investors must provide a portion in unencumbered cash that constitutes as much of their own savings as possible to create equity in a project.
What percentage of a loan does TUHF typically award to someone?
Our focus is on what we call the loan to value (LTV) ratio. This is the maximum loan that can be extended to a customer. In the past, this could be up to 80% of the value of the loan. However, given the challenging economic market, we no longer do this. Instead, we focus on the LTV, which can vary from project to project. The LTC value depends on the cash flow of the investor, the valuation of the project, and the price
For instance, once a seller receives an offer to purchase, they must get a rates clearance certificate. Depending on the size of the property, few sellers might have access to the amount of funds required for the certificate to be issued. If the purchaser has applied for a TUHF mortgage facility, we can assist as this is a critical step in the process to facilitate the change in ownership.
In our example, the seller might make R5-million from the sale of the property with the rates clearance coming in at R1-million. TUHF will loan the R1-million to the seller and recoup the outlay plus interest from the sales proceeds. The transferring attorneys appointed by the seller will then be requested to transfer the funds once the guarantee has been lodged for the property.
What is mortgage bond?
A mortgage bond is typically provided by a financial institution and used to purchase a property. This constitutes an interest-generating loan that is repaid monthly over a fixed period. In the case of TUHF mortgage bonds, this period is a maximum of 15-years. The loan is secured against the property.
Is a mortgage bond just limited to buying a property?
Unlike traditional financial institutions, TUHF extends this beyond the purchase of a property. We also fund construction and refurbishment projects. Additionally, we look at inner-city projects and have recently expanded this to include in-city areas that cover a greater geographic footprint outside a CBD.
TUHF continually develops new products in line with market demands
What are the other considerations when it comes to determining the LTV ratio?
A property consists of more than just the purchase price. There are additional costs to factor in. For instance, the conveyance fees to transfer a property into someone’s name, the bond registration fees, and then other considerations like construction and refurbishment.
For our part, TUHF creates a product for every project whether someone is looking to buy or redevelop a property. We factor in all these different components to determine a total project cost.
Are there other influencing factors when it comes to the LTV?
Our focus is on what we call the loan to value (LTV) ratio. This is the maximum loan that can be extended to a customer. In the past, this could be up to 80% of the value of the loan. However, given the challenging economic market, we no longer do this. Instead, we focus on the LTV, which can vary from project to project. The LTC value depends on the cash flow of the investor, the valuation of the project, and the price
For instance, once a seller receives an offer to purchase, they must get a rates clearance certificate. Depending on the size of the property, few sellers might have access to the amount of funds required for the certificate to be issued. If the purchaser has applied for a TUHF mortgage facility, we can assist as this is a critical step in the process to facilitate the change in ownership.
In our example, the seller might make R5-million from the sale of the property with the rates clearance coming in at R1-million. TUHF will loan the R1-million to the seller and recoup the outlay plus interest from the sales proceeds. The transferring attorneys appointed by the seller will then be requested to transfer the funds once the guarantee has been lodged for the property.