Bank Better, Live Better
the real price of property17/08/2017
The search for your dream home usually starts by setting a budget. Before you start looking, make sure you’ve taken all the costs into account.
Many new home buyers have been caught out by the fact that the cost of their new home is just the beginning. From transfer fees to municipal rates, these extra expenses add up, leaving you over budget.
Avoid this shock by using one of our Homeloans’ calculators . Visiting your bank for a pre-approved bond before you start house hunting will also help take the guesswork out of what you will be able to afford.
Along with the pre-approved bond, your bank will also tell you how much you need to set aside for any additional costs.
The costs you can expect to pay:
You can reduce the impact of some of these costs by saving enough for a deposit. This will help lower the cost of the bond you have to borrow from the bank, which will, in turn, affect other banking costs.
This is tax charged for transferring the property into your name from the previous owner. Transfer duties do not apply if the property value is less than R750 000. However, if the house costs R1 250 000, expect to pay fees of up to 3% of the value over R750 000. A home priced up to R1 750 000 would attract transfer duties of R15 000, plus 6% of the value over R1 250 000, while a home over R1 750 000 in value will need a payment of R45 000, plus 8% of the value over this price.
Here’s a handy comparison for you:
You pay bond costs to the attorney who helps you register your bond. This cost is calculated as a percentage of the value of your home loan, but you’ll also need to budget for extras like stamp duty, VAT and registration fees at the deeds office. These smaller costs typically add up to R2 000.
You will be charged an initiation fee for opening your loan account, as well as a monthly payment for administering and maintaining the account. This fee is usually determined when you start the transaction.
Because you’re making a significant investment, the bank will ask that you purchase home insurance. This will be an ongoing monthly cost.
Before you can move in, you also need to make a payment to your local municipality before they connect your utilities like lights and water. This once-off deposit varies between areas; however, you will also be expected to make a monthly payment for rates and taxes.
If you bought your home through an estate agent, the price you pay for your home will include a commission for the agent.
Moving can be quite expensive. Make sure you’re prepared for the cost of moving.
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Paying off your home
Once you have stabilised financially from the costs of buying a home, or you get salary increases, consider paying extra to your mortgage to shorten the time you will pay it off and save on interest, writes Maya Fisher-French
Transferring the house into your name
Once your bond is approved, the paperwork starts, and legal fees need to be paid. Make sure you understand not just the cost, but also the process writes Maya Fisher-French.