CHECK LIST OF COSTS WHEN BUYING

The major initial capital outlay involved in buying a home is the difference (unless the purchaser qualifies for a 100% bond) between the price of the property and the mortgage loan granted. The buyer is then required to put down a deposit.

However, there are a number of other amounts which represent a significant cash outlay when added together, and are often overlooked by the would-be home buyer.

Among the immediate supplementaries, the prospective buyer should have to take into account:

• Registration of transfer
  The attorney’s fee for transferring legal title to you is calculated according to a sliding scale based on the price of the property.

• Transfer duty
  Transfer to the name of a natural person, Companies and Close Corporations differ and the latter is calculated on the full purchase price at a rate of 8%, irrespective of the amount.

  This amount is collected by the transferring attorney and is paid to the Receiver of Revenue.

  This is the largest single expenditure besides the purchase price and is calculated according to a formula of 0% up to 5% from R500,001 to R1,0 million for a natural person and thereafter 8%.

• Bond registration costs
  These are based on the size of the bond and not the purchase price.

  A point to remember is that financial institutions normally register an additional sum as a contingency measure – ask about this.

• Financial institutions’ initiation fees
  See table below – October 2008

• Insurance (non-sectional title)
  The building & improvements must be insured through the bank with an insurance company for their full replacement value. This will cover damage against which the property is ordinarily insured and such risk as the bank may decide, the monthly premium being automatically debited to the loan account.

• Bond insurance
  You may be asked to take cover or cede an existing policy to protect the bond. This is normally a life insurance policy (which can be included in the monthly bond repayment) guaranteeing repayment of the loan in full in the event of the mortgagee’s death.

  This value is based on replacement value and not the leading value or the assessed value.

• Occupational interest
  The buyer pays the seller for the convenience of taking occupation before transfer is effected.
  This is usually calculated on a pro rata basis, according to days occupied, but paid as a monthly rate to the transferring attorneys.
  This fee is normally lower than the average rental as transfer could be effected before the seller vacates and he then is responsible for rental and should, however, cover the monthly bond repayments of the purchaser or seller, whichever is applicable.

• Portion of rates
  The seller is entitled to the unexpired portion of the rates he has paid to the local authority (due in advance, not arrears). For example, if transfer is taken in the middle of the municipality’s year, the purchaser is liable for half the amount paid.
  The buyer is advised to ask to see a monthly municipal account to access what the monthly fees are going to be.

• Moving in
  Electricity and water connection fees – where a meter exists, the deposit on reconnection is an average monthly account times two.
  Telephone connection and transfer fees.

  Spin-off costs such as furnishings, sundries and contingencies depend on each individual transaction and all the above figures will vary from the one suburb to another.

Standard Bank

FNB

Nedbank

ABSA