There are a few legal and administrative costs that go along with a home purchase. Here’s a rundown, so first-time home buyers won’t be caught off-guard.
- Additional costs of a home purchase include bond registration costs, transfer of property costs, and the deposit.
- There’s also miscellaneous costs such as moving costs, rates and levies, and repairs.
- Ensure you have resources set aside for all the additional costs.
A home is one of the most important and worthwhile investments you’ll make, so it pays to be prepared. In addition to the value of the property itself, you need to bear in mind the legal and administrative costs that go along with a home purchase.
The home loan, and bond registration
Of course, your main focus is going to be the bond itself. The home loan is granted by the bank and will require you to pay it back in monthly installments, along with interest.
Purchasing a home involves some additional expenses, aside from the home loan repayments and interest. One of these additional expenses is the cost of bond registration.
Registering a bond is one of key stages involved in the process of buying a home. In addition to the buyer, seller and estate agent, a number of attorneys may be involved in the bond registration process.
You can use O-YESHome Loans’ Transfer Cost Calculator to determine your bond registration costs. This also includes the bank initiation fee and other miscellaneous fees.
Bond registration costs are not the only costs you pay when buying a home. Additional costs include:
Whether or not you’ll need to pay a deposit on the home depends on whether you have agreed to pay one in your offer to purchase. It is possible to acquire a 100% home loan, with no deposit required; especially in the current climate where banks are eager to cater to the needs of younger home buyers who are less likely to have the funds for a deposit.
In the event you do have to pay a deposit, it usually ranges from 10% to 20% of the property value. Of course, the larger the deposit, the more likely you are to receive favourable interest rates on the home loan. So it’s your choice between short-term and long-term savings.
Transfer of property is the process by which ownership of the property is legally transferred to you. In South Africa, the legal term for this is conveyancing.
It requires the services of a transferring attorney (conveyancer), who will be appointed by the property seller. You will need to sign a few documents, and pay the conveyancing fees. The amount varies depending on the size of your home loan.
You may also be required to pay a transfer duty (a tax levied on property transfers) to the South African Revenue Services (SARS), although this only applies if the property is valued at more than R1 000 000.
Deeds Office Registry Fee
This is a fee charged by the Deeds Office for registration of the bond, and is also dependent on the size of the home loan. You won’t have to pay the Deeds Office directly, as the conveyancing attorney will include it as part of their charge.
Additional expenses unrelated to the purchase or legal transfer of the property might include:
- Moving costs
- Occupational Interest
- Municipal rates and taxes
- Repairs and maintenance
- Home insurance
How much will it all add up to?
Since many of the fees are tied to the size of the home loan, putting an exact number on it can be tricky. As a general rule, the home buyer should set aside around 10% of the property purchase price to cover additional charges.
To make the home-buying process that much easier, O-YES also offers a range of home loan calculators to help make the home-buying process easier. Get prequalified for a home loan with O-YES, then, when you’re ready, you can apply for a home loan with O-YES.