The real cost of buying a home
First time home buyers may not always be aware of the extra capital that they will need to secure and have on hand when purchasing a home. The advertised or asking price of the home is never the final amount. Buyers should expect to pay more than 10% of the selling price in additional fees to secure the home of their dreams. Here are some of the important costs you need to be aware of when buying your home:
Deposits
A deposit is the initial payment made for a new home, and it is sometimes a prerequisite from the bank or financial services provider. It would be wise to start saving for a deposit today if you plan to buy a home in the future — given that many banks and financial institutions do not easily grant buyers a 100% bond. Firstly, consider the type of home you want, such as a three-bedroom house with a beach view. Then conduct your research and take note of the prices of the houses. Aim to save a deposit of at least 10% of what you are prepared to pay for your new home. The more money you have as a deposit, the less will you need to borrow from the bank. In addition, having a smaller bond will reduce your monthly bond repayments.
Transfer duty tax
Transferring a property from a seller to a buyer can involve hefty transfer duties. This is the tax paid by buyers over and above the selling price. It is important to note that there are no transfer duties payable on properties under R900 000, and that transer duties are often not applicable to new developments. However, if you are buying a home within the R900 001 - R1 250 000 price bracket, you can expect to pay three percent of the value above R900 000.
To assist you in your savings plan, here are some other notable transfer duty amounts:
- R1 250 001 to R1 750 000 — 6% on the value above R1 250 000 PLUS a flat rate of R10 500.
- R1 750 001 to R2 250 000 — 8% on the value above R1 750 000 PLUS a flat rate of R40 500.
- R2 250 001 to R10 000 000 — 11% of the value above R2 250 000 PLUS R80 500.
- R10 000 001 and above — 13% of the value exceeding R10 000 000 PLUS R933 000.
Over and above transfer duties, the buyer will also need to pay the bond registration fees and the cost of the bond attorney. Legal fees must be paid to conveyancers for the deeds office registration, postage and disbursements.
Levies, rates and taxes
Buyers should note that if the property they wish to purchase is situated in a complex, levies are applicable and may be charged by the body corporate. Additional levies can be included to cover the cost of a street security guard or boom operator. If you plan on purchasing a freehold property, then rates and taxes are payable. These amounts vary depending on the value of the property and the area.
Home insurance
When buying a home and taking out a bond, the financial services provider of your choice will advise you to take out home insurance. Home insurance covers the new property for various unexpected occurences. It is wise to take note of the area and to find out about common problems experienced by homeowners in the neighbourhood. There are different types of insurance that cover homeowners for various calamties from structural damage caused by storms to fires and burglaries. Be sure to read the fine print contained in the policy documents and shop around for competitive prices.
To work out what you are likely to pay for a new home, check out our easy to use tools. You can calculate transfer duties and other costs which will allow you to plan ahead and find the perfect property to suit your family and your pocket. Contact a Real Partner at Jawitz Properties for more expert advice now.
14 Jun 2019
Author Jawitz Website
