What does “Security” mean when you take out a Home Loan?

When you purchase a property with the assistance of a bank loan, you will often hear the term “security” in connection with the registration of a mortgage bond.

But what does it actually mean?

In simple terms, security is the property that the bank relies on to protect its financial interest in the loan.

When a mortgage bond is registered over your property, you remain the owner of the property. However, the bank obtains a real security right over the property as security for your obligations under the home loan agreement.

The mortgage bond is registered in the Deeds Office and records the bank’s security interest in the property. If the loan is properly repaid, the bond can eventually be cancelled.

If the borrower fails to comply with the loan agreement, the mortgage bond provides the bank with important legal remedies, which may include enforcing its security over the property, subject to the applicable legal process.

In other words:

You own the property, but the property stands as security for the money you borrowed from the bank.

The registration of a mortgage bond is therefore an important part of the property transaction and should be handled carefully by an experienced conveyancer.

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Buying a property? Registering a new bond? Cancelling an existing bond?

The team at Barnard Inc can assist you with the conveyancing and registration process and guide you through the legal requirements involved.

Contact Barnard Inc, we are here to assist you with your property transaction from start to finish.