Cost When Buying a Property
Let’s face it, buying a house is not cheap. While it is generally a wise decision to invest in property, make sure you are aware of all the costs involved...
Let’s face it, buying a house is not cheap. While it is generally a wise decision to invest in property, make sure you are aware of all the costs involved in the process so you don’t run into trouble.
First of all, you need to know how much you can realistically afford to pay per month, as this will determine the size of the bond you will qualify for. You then need to work out how much of a deposit you’ll need to put down. It is possible to get a 100% loan but it’s by no means guaranteed, so aim to save at least 10% of the purchase price to be on the safe side.
Once your offer has been accepted on a house and your bond has been approved, you will have to start paying various fees. All in all, you should budget for approximately 8% of the purchase price for fees. On the plus side, these are all once off fees.
Bond registration fees have to be paid to your attorneys before your bond can be registered in your name. There is also a small cost for sundries and postage payable to the attorneys. A bank initiation fee must be settled in order to proceed with the process.
In addition to those payments, you also need to pay property transfer costs. If your new home costs more than R900 000 there is a transfer duty to be paid as well. You also have to pay municipal rates upfront for the rest of the current financial year.
As you can see, the fees add up quickly and can take you by surprise. There are several online calculators available which will allow you to work out a rough estimate of what your particular costs will be. Alternatively, your bank or bond originator should be able to assist you.
If you are selling a property in order to buy your new home, there are even more costs involved. Most significantly, you will need to pay your estate agent their commission. This is a percentage of the price you are paid for your property and can vary. Other costs include conveyancer’s fees for cancelling your old bond, as well as paying for the various necessary home checks, like electrical certificates.
Once you have your bond finalised, bear in mind that there will be other monthly costs in addition to your standard repayment and admin fee. The bank will require you to have home owner’s insurance in case your property is damaged, for example in a fire. You will also need to take out a life insurance policy which would cover the cost of the property if you do not already have adequate cover. And don’t forget about rates and taxes, as well as levies if you are buying a sectional title property.
All these costs can be very overwhelming and so it is important to calculate them ahead of time in order to know exactly what you will need to pay. While there are a lot of expenses, they will all be worth it when you get the keys to your new dream home.
Writing blogs about the property market of South Africa.
Content Team - Real Estate Agent
