Greyvensteins has been advising corporations and profit companies for years, and we specialise in guiding and advising you regarding the financing and acquisition of company assets. We also draft all relevant commercial agreements and documentation for various financing options.

Securitisation explained

When you borrow money from the bank to purchase a property, the bank from which you have secured a bond needs some kind of assurance that you will repay the funds. The bank’s attorney registers a bond over the property, and in the unfortunate case that you are unable to repay the loan, the property can be sold and the bank can keep its returns.

However, in most cases, the bond is not registered in favour of the bank that has financed your purchase, but rather in the name of a legal entity which is a guarantee company, also known as an SPV – ‘Security Special Purpose Vehicle’. This legal entity stands as a guarantor for your home loan, you indemnify it from any legal recourse in the case you default on your home loan. When a lender cannot pay their debt, an SPV pays the lending bank its money and reimburses itself from the returns of the sale of the property.

Ownership of immovable property lies with whomever’s name the Deed is registered. For first-time homebuyers, that is usually the institute providing a guarantee on their home loan.
This is how securitisation works in South Africa, and it is a complicated legal undertaking involving numerous legal activities and various stakeholders. Contact Greyvensteins Incorporated to get expert guidance and assistance when financing your next property. View our asset finance

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Greg Parker