There's more to pay than the asking price. Often property investors or first-time buyers overlook the 'small things', and this can end up costing the property buyer thousands of rands in the long run.
Bond initiation fee
Your bank will charge you for initiating and opening your bond. This fee may not exceed R6,037. It can be added to your bond amount if necessary, but you'll save on the interest charges if you pay it upfront.
Legal Fees
Buying a home generally involves three types of conveyancing attorneys, who each charge a fee: bond attorneys, cancellation attorneys and transfer attorneys.
The bond attorney will register your bond and prepare the related documents. Their fee is based on the bond amount to be registered, guidelines issued by the Law Society of South Africa and the type of property, with sectional title properties attracting additional costs.
You might be able to negotiate slightly but expect to pay around R15,000 ex VAT for a R500,000 bond and R55,000 ex VAT for a R5 million bond.
A bond cancellation attorney is required to cancel an existing bond on a property - for example, if you have a bond on another property you've sold (perhaps in order to buy your new home). (You will require the services of a cancellation attorney when your bond is paid up too.) This fee is independent of the required "90 -day" penalty interest a bondholder is entitled to charge when the bond is under cancellation.
Fees will be according to the Law Society of South Africa's conveyancing fees guidelines. The average bond cancellation fee for cancelling one mortgage bond ranges between R 4800 - R 5200 (an additional fee will be added for an additional bond to be cancelled).
The transfer attorney is appointed by the seller but the buyer pays them for registering ownership of the property in the buyer's name with the Deeds Office. Their fee is based on the property's value and according to guidelines issued by the Law Society of South Africa. An amount for items like postage and FICA will be added.
It is important to note that the examples above do not account for the related disbursements, for example, postage and petties, FICA identification fees, and deeds office searches.
Deeds Office Fee
The Office will charge you a fee for registering your bond over the title deed. This fee may be paid by your transferring attorney, who will then bill you for it, and you can expect to pay around R 755 for properties of R500,000 to R 2350 and up for purchases of R 5 million.
Transfer duty
This tax is normally the largest cost you will need to pay over and above the purchase price of a property. It must be paid to SARS within six months of the property transfer. (If a seller is VAT registered, you will pay VAT instead of transfer duty. This is often the case when buying a property in a new development.)
Monthly bond administration fee
Your financial institution will charge a small monthly admin fee, usually under R100.
Insurance premiums
To get a bond, you will probably be required to take out homeowner insurance/structural replacement insurance. This is on top of your normal household insurance. Costs vary and you don't have to take the product recommended by your financial institution, so shop around. Depending on your credit scoring and or risk assessment, life cover could be a condition of your mortgage loan agreement.
Moving costs
Depending on whether you use a minivan or a pantechnicon, you could be charged anywhere from a few thousand rands up to tens of thousands. It is always cheaper to move mid-month, so try to arrange that.
Connecting to utilities
Owners of freehold property will need to register for water, electricity and a landline. You're looking at a few thousand rands.
Don't forget about the cost of an internet connection and fibre.
Rates and levies
The liability for a purchaser could entail making provision for 1 - 2 months' worth of the municipal rates & the body corporates levy premium, payable in advance - subsequent to the registration date. You will pay monthly rates for rubbish collection and sewerage, and taxes based on the value of your home.
Shortly after registration (mostly in freeholds), a deposit is charged to open a new water and/or electricity account at the council's office - approximately R 350 water deposit and R 450 electricity deposit.
Owners of sectional title property will pay a set levy every month.
Security, maintenance and renovations
Some suburbs have security in place, which you will need to contribute to. And you will need to decide whether to contract with an armed response company. If your home doesn't have a good system in place, this is a good time to ask the security company about a package deal for an upgrade.