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Home Loan Costs Involved
There are a lot of hidden costs involved when buying a home and most people are actually unaware of them. Buying a home can be very exciting, but also stressful, so it’s always a good idea to plan ahead
Before diving in head first, make sure you do your homework and get all the facts, as not to get any surprises at a later stage
Costs
Deposit
Bond costs
Transfer duties
Conveyancing fees
Deeds Office levies and fees
Rates and Taxes
Banks charges
Home owners insurance
Life assurance
Moving costs
Water bill, Electricity and household costs
Deposit
Most banks require a deposit when applying for a home loan. The only time it isn’t required is when you are a first time buyer. The deposit generally depends on the value of the property, but in most cases it is 20%.
Bond costs and transfer duties
These costs are always overlooked when purchasing a property, and should be studied very carefully so that you understand how it is worked out. These costs can amount to thousand’ of Rands, so make sure you know what they are as it will affect the total value of the property you are looking for. To find out more go to our transfer and bond costs page Click here Transfer costs page link
Note: If you are a First Time Home Buyer you can have these costs included in your Home Loan
Conveyancing Fees (Transfer and Registration Fees)
You have to pay the conveyancers (attorneys) who register that property in your name, as well as the conveyancers appointed by the bank to register a mortgage bond over your property. The Law Society has recommended tarrifs that conveyancers may change to transfer property into your name and register your bond which you can discuss and negotiate with the conveyancers. The higher the purchase price of the property, the higher the fee. The fees are worked out on a sliding scale.
Examples
Transfer Costs (Excluding VAT)
R480 000.00 property cost – R6 000.00 fee
R1 000 000.00 property cost – R10 000.00 fee
In addition they also charge about R250.00 for postage and sundry expenses.
Registration Costs ( Excluding VAT)
R480 000.00 property cost – R4 000.00 fee
R2 000 000.00 property cost – R14 000.00 fee
In addition they also charge about R250.00 for postage and sundry expenses.
Deeds Office levies and fees
The Deeds Office is a government office that falls under the Department of Land Affairs. There are offices all over the country and they are responsible for the registration of ownership and other rights in immovable property.
Transfer Costs
Up to R80 000.00 – fee is R55.00
Between R80 001.00 and R150 000.00 – fee is R200.00
Between R150 001.00 and R300 000.00 – fee is R260.00
Between R300 001.00 and R500 000.00 – fee is R340.00
Between R500 001.00 and R1 000 000.00 - fee is R400.00
Between R1 000 001.00 and R2 000 000.00 – fee is R500 00
Between R2 000 001.00 and R3 000 000 .00 – fee is R650.00
Between 3 000 001.00 and R5 000 000.00 – fee is R800.00
Registering a Mortgage Bond ( Home Loan)
Up to R150 000.00 – fee is R200.00
Between R150 001.00 and R300 000.00 – fee is R260
Between R300 001.00 and R500 000.00 – fee is R340.00
Between R500 001.00 and R1 000 000.00 – fee is R400.00
Between R1 000 001.00 and R2 000 000.00 – fee is R500.00
Between R2 00 001.00 and R3 000 000.00 – Fee is R650.00
Between R3 000 001.00 and R5 000 000.00 – fee is R1 000.00
Rates and Taxes
Property cannot be transferred from one owner to another until the rates due to the local authority have been paid in full for the financial year. The seller is liable for rates only for the part of the year during which he/she occupies the property. In addition to paying a pro-rata proportion of the municipal rates for the year, the buyer will be charged for a rates clearance certificate which is about R30.00. If you are buying a sectional title unit, expect to pay your levy up to the end of the body corporate’s financial year, and to pay for a clearance certificate from the body corporate which is between R400.00 and R800.00
Bank Charges
If you finance your new home with a home loan, you must make provision for the following charges.
Valuation Fee – commonly known as an assessment fee to cover the costs of a bank appointed property assessor. This fee is between R1000.00 and R3000.00
Interim Interest – on the day the bond is registered, the bank releases the loan amount and charges interest from that day until the day on which the first instalment is due. This can be added to the loan amount or can be settled immediately after the loan has been released
Bond initiation Fee – The bank may charge a once off fee ranging from R200.00 to R1250.00 to cover it’s administration costs. The minimum fee for a loan under R500 000.00 is R175.00 excluding VAT
Administration Fee - Once your loan has been registered, the bank charges a monthly admin fee of R5.70 (including VAT) which is reflected on your statement as a separate item. Some banks charge R22.80 (Excluding VAT) on bonds over R500 000.00
Home Owners Insurance
When taking out a home loan, the banks will insist that you take out home owners insurance, before the loan is approved. In fact it is a condition and in most cases, the banks will recommend their own brokers, so get a few quotes before signing your policy. Our affiliated company Liso Life & Investment Solutions (Pty) Ltd can assist you with putting both Homeowner’s insurance and Household Insurance in place from one of the major short-term insurance companies available.
For more information on home owners insurance Click here ( Link to Liso Life website)
Note : if you are buying a flat or sectional title unit, the home owners insurance is usually included in your monthly levy. Ask your estate agent about this when you make an offer to purchase.
Life Cover (Insurance)
In most cases the banks will insist that you take out a life cover policy, if you don't already have one. Generally this is only required when the value of the property is less than R 150 000.00, but each Bank is different, so ask this question before applying for your home loan. Essentially this is for the protection of you and your family, ensuring that your home loan is settled in the event of your death. Our affiliated company Liso Life & Investment Solutions (Pty) Ltd is registered, licensed and qualified to draw up a policy for you which you are able to lower as your bond balance lowers over the years. Banks also have brokers who can assist you however be aware that most of the policies issued through a bank broker are usually owned by the bank, so when the bond is paid for in full the policy needs to be ceded back to you which affects the maturity payout amount. It is advisable to be the owner of your policy and to only make the bank the beneficiary thereof so that once the bond is paid you simply change the beneficiary. This will not affect the payout amount.
Click here to request a free no obligation quote
Moving Costs
The cost of hiring movers is high, especially if you take out insurance to cover damage to your goods during your move
Water, Electricity and Household Costs
These expenses are often neglected when purchasing a property, although they have nothing to do with your home loan expenses, some of them are monthly expenses and must be taken into account when doing your budgets
Water
Electrical – connection costs
Telephone – connection costs
Curtains and or blinds
Installation of a security system
Note: If you are purchasing a flat or a sectional title unit, your water bill will be included in your monthly levy.
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