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Why installment sales are a viable alternative to the home loans to buy a new home
A very small number of people are able to afford paying the full price of a home when buying it. Most people apply for home loans in order to buy a home, but almost half of the home loan applications are rejected. In this situation, many people opt for the other alternative to home loans and that is the installment sales. Almost 5% of the property sales in South Africa at present are based on this type of deal. The installment sale reduces the burden of paying the complete amount of the property price in one go. Usually in this type of deal the seller agrees to take the full price of the property over a period of 5 years.
Although the installment sale does not give you as much leeway as a home loan, it does give you a considerable amount of time in which you can pay for the property. The Alienation of Land Act passed in 1981 has made these types of deals possible and bought the rights of the buyer, as well as the seller of the property, are protected with the help of this act. This act allows the buyer to purchase the property by paying the sales price in more than two installments. The period in which this price has to be paid is more than one year, but cannot exceed 5 years.
This kind of sales transaction is simpler compared to a home loan transaction. When using a home loan the buyer pays two installments – the first is the deposit paid when purchasing the property and the second installment is the loan amount. The loan amount is given to the borrower by the lender and is repaid in full along with interest at the end of the term. On the other hand, in an installment sale the terms and conditions of the deal and the way in which the payment will be made are negotiated by the buyer and the seller. Once an agreement is reached they sign a property sales contract. An attorney or team of attorneys drafts this contract. These attorneys are specialists in the Alienation of Land Act. These attorneys ensure that all the legal requirements are met and bought the rights of the buyer as well as sellers are protected in the process.
You can learn more about installment sales and the Alienation of Land Act by performing some research on the internet. This is a great option for people who are either unable to get a home loan.
About the Author:
Profitech Credit Solutions provide instant loans information services to people, nationwide in South Africa. One can stabilize their financial future by making calculated decisions. They offer competitive interest rates for instant loans in SA. Their information and advice on getting an instant loan in South Africa is updated on a daily basis. Read through their useful tips & practical advice on getting a loan. They provide financial tips, news, and a business directory for lenders.