Know the Costs Involved
It is important for homebuyers to understand the total costs involved in a property transaction and also to know when such payments are due before an offer is put on the table in order to avoid a difficult legal situation. Each buyer must know exactly what the upfront cash requirement as well as the total recurring monthly commitment is. Following is a broad outline of the costs involved:
| Buyer’s cost sheet |
| | |
|
R Value |
| | |
Purshase Price |
R x xxx
xxx-xx |
| A | Transfer duty and other transfer costs |
| |
| | |
Bond
required | R x xxx xxx-xx |
| B | Bond registration costs |
|
|
| A+B= | Total costs |
|
|
| C | Total cash required upfront
| | |
| |
deposit
|
| |
| |
Total Costs A+B
|
| |
| D | Total monthly commitment
| | |
| | Monthly bond installment |
| |
| | Homeowners insurance |
| |
| | Estate/Sectional Title Levy |
| |
Other important notes:
- The South African law stipulates that transfer duty (i.e. the tax on a property transaction) becomes payable as soon as a sale agreement is signed. The agreement will in most cases state that the costs (which include the transfer duty and the attorneys’ fees and disbursements) are payable on demand by the conveyancer.
- Where a buyer is caught by surprise by the timing of the payment of transfer duty, it is often possible to arrange bridging finance or a loan. Your agent or an attorney would be able to introduce you to those capable of granting such monies.
- As a guideline, transfer duties are not charged on homes below R600 000 in value. For those valued at R600 000 to R1 million the transfer duty is 3%. Homes priced from R1 million to R1.5 million pay 5% transfer duty and those homes above R1.5 million are charged at an 8% rate.
- Ask your agent for an indication of the bond registration costs involved.
Also consider...
- Municipal deposits for water and electricity
- Cost of moving, new curtains, carpets, furniture and so on