The extra costs involve when taking out a home loan

When you buy a home, one can get very exited about the idea. But before doing this you should find out what costs are involve when buying your new home or it can cause you a lot of stress later on.

The cost involve when buying a new home are as follows:

The deposit
Occupational Rent
Bond Costs and Transfer fees (duty)
Conveyance Fees (Attorney fees)
Deeds office levies and fees.
Municipal rates and body corporate levies
Bank Charges
Homeowner Insurance

The deposit

The banks will always ask you to pay a deposit on your mortgage. Depending on your financial status and how much you borrow, will cause this to vary somewhat. SecureBonds has a few calculators which can give you a good idea on how much your deposit will be.

Occupational Rent

Occupation rent can accrue when a buyer moves into a home before the registration has taken place. The seller can then charge the buyer Occupational rent till the bond has been registered.

Bond Costs and Transfer fees (duty)

When you buy your new house you will have to pay tax to the receiver of revenue for buying the property and transferring it to your name. When you buy a piece of land then you will only need to pay the transfer duty on the value of that land. When you buy an existing house, you will have to pay the transfer duty on the value of the land and the building. This is charged on a certain scale.

If an individual buys a home he/she will have no duty fees on the first R500 000 of the purchasing price. When the amount is R500 001 to R1 000 000 then the individual will have to pay 5 % of the purchasing price. When the purchasing price exceeds R1 000 000 then another 8 % has to be paid.

If you buy a property in the name of a close corporation, a company or a trust then you will be charged a fee of 10% on the purchasing price.

If you buy from a developer, who is registered for VAT, then you will be paying the VAT in stead of the transfer duty.

Conveyance Fees (Attorney fees)

When you buy hour home, the registering attorney or the attorneys who transfers the property to your name, will ask you a fee. If you wish to choose SecureBonds we can organize a 50% discount on your attorney fees.

If you get a mortgage from the bank, they will have a registering attorney who transfer your home and will be charging you a fee.

Conveyance’s usually charge postage as well of about R250 (excluding VAT).

Deeds office levies and fees.

Charges by the deeds office to register and transfer a property can vary a lot depending on the purchase price of the property. The scale follows:

R0 – R80 000 = R55
R80 001 – R150 000 = R200
R150 001 – R300 000 = R260
R300 001 – R500 000 = R340
R500 001 – R1 000 000 = R400
R1000 001 – R2 000 000 = R500

The fee for registering your home loan also varies depending on the size of your bond.

Up to R150 000 = R200
R150 001 – R300 000 = R260
R300 001 – R500 000 = R340
R500 001 – R1 000 000 = R400
R100 001 – R2 000 000 = R500

Municipal rates and body corporate levies

The rates due to the local authority have to be paid in full for the financial year before the property can be transfers. The Seller is liable for the rates, only for the part of the year in which he/she occupies the property. The buyer will then be charged for a clearance certificate which is about R300.

Bank Charges

Valuation fee:

You will have to make provision for a Valuation fee when buying a property. A property inspector who determines the value of a property will check if the value is in relation with the loan or further loan amount you have applied. These fees range from R1000 to R3000.

Interim Interest

When your bond is registered, the bank will release the loan amount and charges will be added to the loan amount as interest until the first instalment has been made.

Bond Initiation fee

The banks will usually charge you a once off fee for administration costs. This will vary from R200 to R1250.
Homeowner Insurance

The banks will usually insist that you take out home insurance before registering your home loan. They will most probably get their own brokers to help you, but the best is to get a few different quotes to get the best deal.

Household insurance

Household insurance will be another expense that you have to budget for. It is imperative to have this. If you don't then you will not be able to claim back any losses or damages caused on your property.