Home buyers, especially first-time ones, often tend to overlook the extra costs involved when buying a home.
The bond payment is one of the recurring costs, but let’s not forget the extra (hidden) costs those first few weeks and months of owning the property, ranging from bank fees to attorney fees etc.
Your monthly budget will definitely need to be adjusted to accommodate some of these items, which is exactly why it’s highly recommended NOT to borrow as much as you can! How else will those extra’s be paid for?!
What’s The Full Price Of Buying a Home?
Buying a home is an exciting time, though there are often added costs than just the purchase price of the property.
“In some ways, much like buying other expensive assets such as a car, for instance, there are other costs involved,” says Lolly Unterslak, property consultant at Jawitz Properties Atlantic Seaboard.
Before walking into the car dealership, you know you’ll be paying the purchase price of the car. But you also know that the car will need registering with your local municipality, you’ll need to take out insurance coverage and you’ll have to fill up the tank regularly and keep the vehicle maintained, meaning eventually you’ll pay more to own the car than just the purchase price.
“Buying property works the same,” Unterslak explains. “You’ll expect some costs, but may find hidden costs, or rather previously unknown costs that are also payable during the process, so it is best to be prepared.”
What you need to know first
If you’re buying the property with a home loan, bond registration costs are probably the first hidden items for your account that you’ll run in to. These include a bank initiation fee and do not form part of the bond, but are in addition to it.
“When registering your bond, you’ll also be dealing with different sets of attorneys,” Unterslak advises. “As the buyer, you will be liable for the legal fees of the bond attorney – who is appointed by the bank to register the bond.”
Possibly the most onerous expenses are the transfer costs you’ll be liable to pay.
“Once the transfer agreement is signed between you and the seller, in addition to transfer duty itself, there will also be legal fees, deeds office fees and posts and petties that you will have to cover,” Unterslak says.
When it comes to fixtures, there are many variables.
“Blinds are usually included as a fixture, and therefore priced into the total purchasing price,” Unterslak continues.
“However, curtains are not considered fixtures, and will need to be specified and priced in if they are to be included in the sale.”
The same applies for items such as appliances unless they’re built in, in which case they are considered a fixture.
If you are buying the property with money that is brought into the country from an overseas account, for instance, keep in mind that certain taxes and bank charges could apply when transferring your capital across borders.
It is also worth keeping in mind that moving itself is not a cheap exercise.
Paying a company to do it professionally can mean quite a high bill, depending on a number of household contents you own. There is also moving insurance to consider – your belongings might need to be covered by in-transit insurance on moving day.
Post-moving day considerations
If the property you are buying forms part of a sectional title scheme, you must keep in mind that it is common for a monthly levy to be payable to the scheme’s body corporate. The financial burden for any buyer when it comes to these levies though is the application of special levies.
“A special levy is sometimes raised as a once off payment that a sectional title scheme will collect for the undertaking of a specific project, like the installation of an elevator for instance,” Unterslak explains.
“Such special levies are payable by the seller if the levy was raised before the date of the transfer and was payable in full prior to registration of transfer. The levy will be payable by you, however, if it is raised after the transfer date or if it was raised prior to registration of transfer but is collected by the Body Corporate on a pro-rata monthly basis in which case you will be liable for the monthly pro-rata amount after the date of transfer.”
Any possible special levies must be disclosed to you by the seller, during the transfer negotiations.
Occupational rent will also be payable by you, should you need to occupy the new property before the transfer has been registered.
One final cost that might catch you off-guard is decorating.
“If you are inclined to pay special attention to the details around the décor of your new home, you might find it surprising how expensive it can be to purchase new materials to decorate to your taste. Everything from your curtains to your rugs, to the upholstery or your lounge suite, might need to be changed, eventually equalling a considerable sum.”
Being prepared for these costs, even before you start to look for your new home, will stand you in good stead.
Issued by Jawitz Properties – http://www.jawitz.co.za