The excitement of buying a home doesn’t need to fade because of unexpected costs. By being aware of the expenses involved in purchasing a property you’ll be able to plan for these and will have no unexpected surprises waiting for you after you’ve signed your offer to purchase. Here are some of the most common expenses involved in buying a home, assuming you will be taking out a home loan.
Unless you are a first-time home buyer you’ll need to put down a deposit on your property. While the average deposit required is in the region of 20%, you’ll need to decide whether paying a higher deposit is affordable. By paying a higher deposit you’ll reduce your capital amount and save on interest payments. Remember that home loans almost always attract more interest than the bank pays you for cash on deposit – this means that paying a larger deposit will save you money in the long run.
Bond Fees and Transfer Duties
Often overlooked by property buyers, these expenses can amount to thousands of Rand. If you’re a first time home buyer these fees can be included in your home loan, but all other buyers should budget for these. Your bank will provide you with the full amount payable, so before you purchase a home make sure to enquire about the latest fees and transfer duties.
Transfer and Registration Fees
The lawyers who register the property in your name will charge you transfer and registration duties, which increase with the value of the property on a sliding scale. A property worth R1 Million may attract transfer duties of R10 000 or more, and this payment is not negotiable in most cases so it must be budgeted for.
Deeds Office Fees
The government’s Deeds Offices are located throughout the country and is responsible for registering properties. The fees involved range from several hundred Rand to over a thousand Rand depending on the value of the property.
Bank Fees and Homeowner’s Insurance
Several extra fees are levied by the bank when you take out your bond. These include valuation fees, interim interest payments, bond initiation fees, and administration fees. Combined, these fees may exceed R5000 depending on the bank and size of the bond. In addition, the bank will insist that you take out homeowner’s insurance on the property before the bond is initiated.