Homeownership: beyond the purchase price
Category Property Advice
You've found a lovely home, and your finances seem promising, with a solid credit score and a property deposit. However, keep in mind there are other expenses to consider, like bond fees, moving costs, and unexpected expenditures.
These costs can surprise first-time buyers, who may not be aware of them. Being informed about these expenses is important for a smoother home-buying experience.
Costs of buying a house?
When you're house hunting, you use the home price to estimate your monthly loan payment. But there are other fees and costs beyond the monthly payment and potential deposit.
While these costs aren't hidden, most seasoned buyers are familiar with them. However, first-time buyers might be surprised by these expenses since they might need to be more familiar with the amounts involved.
1. Bond initiation fee
This fee covers the administrative process of starting the bond and creating a bond account under your name. The bank charges it, and the amount can vary depending on the lender. Some banks charge around R6000 as a fixed fee, while others base it on a percentage of the loan amount. To avoid accruing interest, paying this fee upfront is a good idea. If not, it will be added to the loan amount.
2. Bond registration fee
After that, you pay a bond registration fee to the lawyer in charge of registering your bond. The amount is calculated using a scale that varies based on the size of your bond. The buyer must pay the cost in full before the registration procedure can begin. For example, the registration price for an R1,000,000 bond can be R29,000.
3. Registration fees: sundries
This fee is associated with sending out paperwork, such as bond registration and legal services, which must be covered before you may register a property in your name. The buyer is responsible for paying whatever transfer fee the attorney charges to record your ownership with the deeds office charges.
4. Conveyancing fee
After buying a property, the ownership shifts to the new owner. It involves creating a new deed of transfer and registering it in the deeds office. Budgeting for this expense is essential as the seller chooses the conveyancer.
For the transfer to be completed, buyers and sellers must sign the transfer deed. Then, submitted for official registration. Once registered, the property's ownership is officially transferred to the new owner.
5. Transfer duty fees
When you buy a house, you must pay transfer fees to the state for the property to be officially transferred from the seller to the buyer. Transfer duty is a fee based on the property's worth when ownership changes hands from the seller to the buyer, including the rights to the land and fixtures.
The amount of transfer duty you're required to pay depends on the property's purchase price. Properties valued at less than R1 100 000 are exempt from transfer duty. If you've paid R1 100 001, a fee will be charged based on the SARS Transfer Duty.
6. Relocation costs
Moving costs are something to consider when moving to a new home, especially after the lengthy transfer process. It is essential to consider moving expenses, which can vary depending on where you're going and how much stuff you're transporting. Start by checking the prices online and get quotations from at least four reputable moving companies.
Tips for managing these costs:
Being a homeowner comes with various costs, necessitating planning and a disciplined approach to money. Here are some helpful tips for prospective homebuyers:
- Prepare a detailed budget that includes both one-time expenses and ongoing monthly payments.
- Set up an emergency fund to pay for repairs or maintenance that come up out of the blue. Having a little extra money means that homes can take care of emergencies without going over budget.
- Go with a different choice regarding costs. Look at different quotes and providers to find the best deals.
- Put money away regularly in a savings account for housing costs. It can help you keep up with regular repairs and be ready for any surprise costs.
If you're considering buying property from Upton Properties, browse our properties for sale, or contact our property practitioners for more information.
Author: Upton
