Shedding light on the top 5 hidden costs of buying a home
You’re starting a new chapter in your life. Don’t let happiness turn into a headache, start your investment off right by knowing the hidden costs of buying a home.
You’ve decided that it’s time for a move. And while you’re looking forward to all the pros that come with buying a new home, have you ever stopped to consider – “What are the hidden costs involved in purchasing this new ‘casa’?”
It’s a very good question and luckily for you – the South African real estate industry is where our expertise lie. Knowing the ins and outs of property before making an investment is a smart move.
Buying property is a big commitment. We’re here to help you gain clarity on some of the hidden costs of buying a home and to help you make sure that you start your investment off on the right foot.
So, without further ado, here are 5 of the biggest costs to budget for when buying a home.
The 5 covert costs of buying property
- Transfer costs
- Bond initiation fees
- Deposit costs
- Transfer duty
Although there may be more costs you run into when buying a house such as renovations, repairs, furnishing, these 5 costs are the top, most frequent ones that people tend to look past or not fully understand until it’s too late. Let’s look at each cost with greater detail.
In order to register your ownership of the property, you need to pay something called transfer costs.
These costs are paid once-off prior to registration and are a professional fee that is charged by the transferring attorney.
Bond initiation fees
These fees are charged by whichever lending institution you decide to go through and are charged for the initiation as well as the continuing administration of your bond.
Your deposit is the amount that you pay as the initial payment for your house. A deposit is not always required but it is very useful to secure a bond as well as to bring down the monthly bond repayments
This cost can vary from anywhere between 10% and 30% of the purchase price of your home, depending on what your credit rating looks like.
When buying a new home, you need to come to grips with the fact that your transfer duty is going to be one of the heftiest upfront costs of buying a house.
The transfer duty is a tax that is payable by buyers of properties. It is usually calculated over and above the selling price and in fact, is not based on the price of your property, but its value.
In order to ensure the value of the bank’s security on your loan, the bank requires that you take out insurance.
However, this is not only for the bank’s piece of mind, but also for yours. A new home brings with it a range of new responsibilities. It’s only sensible that you put the provisions in place to make sure that you have the right coverage.
Buying a house is expensive and unfortunately, there will be many new home expenses that come along with your dream home.
However, if you familiarise yourself with the hidden costs of buying a home, do your homework and start saving in advance, you’ll be able to deal with all these costs and start your investment off on the right foot.