‘These costs vary according to the size of your home loan and the property purchase price.’
Buying property is always a good investment, but sometimes the hidden costs can catch your budget off guard if you are not prepared for the extra costs involved.
Nedbank says it is important for future home buyers to know that monthly loan repayments are not the only costs associated with owning property.
“This is often an unpleasant surprise for first-time buyers caught up in the thrill of the home-buying process. Some of these costs need to be paid before the home can be registered in your name, and some are ongoing costs after becoming a homeowner.”
The bank advises first-time buyers to be prepared for some initial administrative costs. These include the home loan initiation fee that you would need to pay to the bank for processing the home loan application.
“Bond and transfer costs are the conveyancing or legal fees you will pay to the bond attorney appointed by the bank and the transferring attorney appointed by the property’s seller to transfer ownership to you.
“These costs vary according to the size of your home loan and the property purchase price.”
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Relocation and moving-in costs
The process of transferring a property into your name can take up to three months, which Nedbank advises could be the perfect time to plan your move. Moving furniture to a new place is an unavoidable expense that could cost thousands of rand.
“First, search online to find a reputable mover, and get quotes from at least three companies to compare prices and insurance cover. You should also check online reviews and rankings of any companies that you are considering.”
The bank added that many first-time buyers are not aware of the possibility of paying occupational rent after moving in. It is levied and paid to the seller only if you move in before the property has been transferred into your name.
If you urgently need to move in before the transfer process is completed and the seller allows you to, you will be living in a home that still belongs to the seller.
This does not apply if you move in only after the house is transferred to your name. “Check with the estate agent whether this clause is included and at what rate. The amount is typically around 1% of the property value.”
Recurring monthly costs
Other costs that the bank advises first-time buyers to be aware of are rates and taxes.
This is a monthly bill that includes land taxes and charges for municipal services such as refuse collection, electricity, and water. “An important note about your municipal bill is that you will have to pay a deposit upon moving in.”
This cost varies according to the local council’s rules and is based on the property’s past monthly costs. “You will receive this money back when you sell your property, but be sure to check with your estate agent or local council for how much you need to budget for your initial deposit.”
If you are moving into an apartment complex or a security estate, you may also have to pay a deposit on your monthly levy. The levy is used to cover the cost of security and maintenance of common areas and facilities, and is in addition to your bill for utilities like water and electricity.
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Unforeseen maintenance and upgrades
The bank advises taking expert advice on the condition of a property before buying it, as unexpected expenses are the biggest threat to your homeowner budget.
It is important to look out for any maintenance issues or upgrades that will need to be dealt with immediately.
“Be especially vigilant for structural problems like the electrical systems, roof leaks, plumbing, cracks, mould, and damp. These are not only costly to repair, but should be pointed out to you by the seller or estate agent.
“You must know what you are buying and how much more you will need to spend; this will affect the offer you make. If these defects were hidden from you, and you only discovered them after the sale, you can demand that the seller repair such problems or pay for the repairs. But that’s a legal wrangle you can avoid by checking these issues beforehand.”
Homeowner’s insurance
Once you become a homeowner, it is important to be ready to pay for home insurance. The monthly premium depends on the value of your property.
It is best to get insurance that covers your home if it is damaged or lost (for example, by fire).
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