Buying a property is not just a matter of finding a good property and then arranging a bond for it. There are many other charges that you have to consider before starting to look around for properties, and you have to work these into your budget to ensure that you don’t get caught off guard halfway through the buying process.
Deposit: Nowadays banks are very strict about lending money and most require a significant deposit in order to secure a bond for a property. Typically they will not lend you more than 95% or less of the cost of the property, which means you have to make up the difference. As a result you have to be prepared to pay the deposit before the bond can be approved. Some buyers make the mistake of borrowing money to cover the deposit, but doing this may add significantly more financial stress – rather save and ensure that you have the money available.
Transfer duties: If the purchase price of the property exceeds R750, 000, a fee is payable to a property lawyer for the transfer of ownership from the seller to the buyer. The buyer is liable for these costs.
Registration of the bond: The services of a bond attorney will be required to represent the interests of the bank and to draw up the necessary contracts and documentation for the bond. As with transfer duties, the buyer is liable for these costs. Usually payment is required within a few days after all the required bond documentation have been completed and signed by the seller.
Rates and Taxes: While the seller is responsible for all outstanding levies, rates and taxes up to the date of that the property is registered and filed at the deeds office. After this, all rates, levies and taxes will be paid by the buyer. However, take note that if you purchase a property by public auction, the buyer will be responsible for outstanding fees. This means that the buyer has to ensure that they are aware of outstanding rates, taxes and levies before making the purchase, otherwise it could result in a costly mistake. Most of these fees are state regulated and the buyer can get access to these upon request, but for those who don’t make provision for these costs it could be a nasty surprise.
Be sure that you know exactly how much money you will be required to pay when buying a property and prepare for this to ensure that you don’t get caught off guard!