I am currently considering purchasing two properties for my children, aged 17 and 19 years. Would it be possible for me to obtain mortgage finance if I stand surety for the children?
It is only possible to obtain finance and register a mortgage bond in favour of individuals who are 21 years of age and over, unless the Master of the High Court (purchase price below R100 000) or the High Court (purchase price above R100 000) consents the registration. If mortgage finance is not required the properties can be registered in your children's names. However, should you wish to sell the properties prior to each child turning 21, you would also require authorisation from the Master of the High Court or the High Court, to proceed with the sale. This can be a very costly and time consuming process.
The other, and most probably the best option, is to form a Trust and make the children beneficiaries of the Trust. You will be glad to know that mortgage finance can be obtained by a Trust. If purchasing the properties in a Trust, the Trust would have to be formed prior to purchasing the properties and, Transfer Duty of 8% of the full purchase price of the properties will be payable.
Wishing you much success with your house hunting.