You found your dream home and want to make an offer, but you are worried about your budget and everyone keeps telling you that with a new house there are so many additional costs you need to take into account. So what are these costs?
Generally speaking there are “once off costs” and “regular monthly costs” that need to be taken into account.
Conveyancing fees are the first “once off cost” item to be considered. The seller usually nominates the transferring attorney and the bank will appoint the bond attorney. Accordingly, there will be two separate accounts payable, which will be for the purchaser’s account. Apart from the fees for registering the transfer and the bond, which are calculated according to a prescribed sliding scale, the following items are also included in the accounts of the conveyancers:
- Transfer Duty (a tax payable to SARS) in the event of a transfer where the purchase price exceeds R600,000.00
- VAT on the transaction if the seller is registered as a VAT vendor;
- Postage and petties
- Fee for obtaining a rates clearance certificate from the municipality;
- Fee for obtaining the transfer duty receipt via E-filing;
- Registrar of Deeds registration fee;
- Fee for FICA verification;
- Diverse disbursements, which may include: deeds searches, tracking fees, copy of the title deed, courier cost, etc.
Looking at other “once off costs” you should take into account the facts and your special and personal circumstances and needs. These costs, depending on your circumstances, could include:
- Deposit on the new house;
- Occupational rental, if you are planning to take occupation before date of registration;
- Municipal deposits for electricity and water;
- Deposit for telephone and land / data lines;
- Cost of relocation/moving;
- Cost of new curtains/blinds, carpets;
- Costs of new appliances, such as a stove, dishwasher, washing machine etc;
- Cost for installation of satellite tv;
- Costs of new security system, particularly where required by your insurance;
- Home loan initiation fee payable to the bank;
- Home inspection fee, should you wish to utilize the services of a professional home inspector;
- Perhaps you are moving from a flat to a house with a garden – then you may need a lawnmower and other garden tools;
- House repairs/refurbishments to repair/upgrade critical areas of your new home that may need work or repairs;
- New furniture costs, particularly if moving from a smaller to a larger home.
“Regular monthly costs” should also be carefully considered as these can have a tremendous impact on your monthly cash flow. Some of the most important monthly expenses are:
- Bond installments on your home loan;
- Homeowners insurance on your home;
- Municipal rates and taxes;
- Monthly water and electricity costs;
- Monthly levy if you are buying a sectional title unit;
- If the property has a swimming pool, include costs for pool maintenance;
- Is the house situated further away from your place of work, schools, shopping centers and other key destination areas? Remember to increase your fuel budget accordingly;
- Ongoing maintenance of the property. As a rule of thumb, you can spend between 0.5% – 1% of the value of the property on regular maintenance of your home;
- Life insurance premiums may increase should you have to increase your cover as security when taking into account the bond amount.
You are welcome to contact us once you are ready to make an offer on a property. We can assist with the drafting of your offer to purchase, provide you with an estimation of the conveyancing fees and explain the different cost items you may face. Also important to consider is whether you may need to update your Will with the details of the new property that you will be acquiring.
With a well-prepared budget and your offer to purchase in hand, you can make your dream a reality.