EXPLAINED | Here’s how you can buy a property with 11 others on one home loan

The initiative was introduced by FNB to help customers who cannot afford property due to income barriers.
The initiative was introduced by FNB to help customers who cannot afford property due to income barriers. 
Image: Siphiwe Sibeko

Aspirant property owners can now get home loans through the collective lending system, which allows up to 12 people to apply for a single home loan.

The initiative was introduced by FNB to help customers who cannot afford property due to income barriers. 

Applicants have the option to either split the payments equally or pay more towards their instalment, depending on affordability, FNB  spokesperson and Home Finance Growth head Mfundo Mabaso told Sowetan.

Here's an explainer of what collective buying is, and how it works: 

How does the loan work?

The loan takes up to 12 people for those who are applying through the bank and up to eight for online applications.

Applicants will be required to submit all the supporting documentation which will be used for credit assessment and credit conduct for each applicant. 

Once successful, the group will be notified of the approval, pending the valuation of the property they applied for. 

“Once the valuation is received and the property is found to be in order, the application will move to a final quotation, where the final details of the application are provided to the customers, this includes the loan amount, loan term up to 30 years, interest rate and any other conditions that might apply,” explained Mabaso. 

How does the group repay the loan?

After the loan approval, the bank will set up a debit order for monthly payments. This can either be split or deducted from one account, inform the legal team and facilitate the bond registration at the deed's office. 

Mabaso said the title deed will have all the names of the applicants as they have equal ownership of the property. 

Are there risks associated with collective property buying? 

If one of the members miss payments and the rest fail to make up for it, the account may be in arrears and affect the credit profiles of all the members of the group.

What are the advantages of buying properties collectively?

Buying as a collective helps ease the burden of monthly bond payments. 

Would you like to comment on this article or view other readers' comments? Register (it’s quick and free) or sign in now.

Speech Bubbles

Please read our Comment Policy before commenting.