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The Mortgage Commitment Letter is a crucial document in South African property financing transactions, issued by financial institutions after completing their initial assessment of a mortgage application. This document, regulated under South African banking law and the National Credit Act, represents the bank's formal commitment to provide mortgage financing subject to specified conditions. It typically follows a successful loan application and property valuation, but precedes the final mortgage agreement. The letter details the approved loan amount, interest rates, repayment terms, conditions precedent, and required documentation. It serves multiple purposes: providing the borrower with written confirmation of the bank's intention to lend, outlining all material terms and conditions of the proposed mortgage, and serving as a reference document for other parties involved in the property transaction. The commitment letter remains valid for a specified period, during which the borrower must satisfy all stated conditions to proceed with the mortgage.

1. Lender Information and Reference: Bank/lender details, reference numbers, and date of letter

2. Borrower Details: Full name and contact details of the borrower(s)

3. Property Details: Description and address of the property being mortgaged

4. Loan Amount and Terms: Approved loan amount, interest rate, loan term, and type of interest rate (fixed/variable)

5. Monthly Repayment Details: Estimated monthly payments, including principal and interest breakdown

6. Conditions Precedent: Requirements that must be met before the loan becomes effective

7. Required Documentation: List of documents needed to proceed with the mortgage

8. Costs and Fees: Breakdown of all associated costs including initiation fees, legal fees, and registration costs

9. Validity Period: Time period for which the commitment remains valid

10. Acceptance Instructions: Steps the borrower needs to take to accept the offer