Some considerations when buying your new home
By HouseFurb, July 27, 2018
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Buying a property, especially your first property is exciting, nerve-wracking and a great achievement. But it can be fraught with difficulty if you don't know what you're doing.
Did you know that there are risky areas especially in Johannesburg CBD, that Banks do not finance? Do you qualify for a Mortgage? Which area are looking to buying at?
You also need to be aware that Banks no longer fund 100% bond, the more the property prices rise the higher the deposit. Many home buyers are unclear on exactly how much they’ll need for a deposit. There are no exact figures, as this depends on the property and the individual circumstances. Generally, try to save between 5-20% of the initial cost of your new property. The more deposit, the less the repayments on bond.
There’s more to buying a property than what you think. These are things you need to know before buying:
- Due Diligence - Buyers more specially first time buyers need to follow a due diligence process. One of the first problem areas to check is to make sure there are no illegal structures built on the property you want to buy. The illegality will pass from the seller to the buyer.
- Location - The value of the property is also determined by the area. Do your homework, research about the area.
- Estate Agent - Choose the right estate agent: An estate agent will be able to tell you the Conditions, Payment terms, Handover period must be clearly defined, Liabilities and claims. Understand the Sales contract.
- Property Inspector - An independent inspector would know which illegalities to look out for and raise red flags where necessary.
There are costs related to buying a property that buyers need to look at:
- Transfer costs and Bond Registration costs - These are associated with transfer duties with the attorneys and always calculated bases on the purchase price. Wondering how do you know how much will be your transfer fees and bond fees? Well ooba made it easy for you, visit ooba bond and transfer costs calculator
- Bond Deposit - When taking out a bond, the bank normally wants a minimum of 10% deposit of the total bond amount. This can go up to 30% depending on the individual's credit rating
- Initiation fee - This fee is charged by the bank when you take out a loan. This is a once-off fee covering the cost of processing the home loan application. It is regulated by the National Credit Regulation Act (NCR)
- Transfer duty - This fee is paid after the deposit. It is the tax levied by the Government and no property can be transferred to a new owner if this fee is not paid up. If you are buying from a VAT registered vendor, you do not have to pay this fee as VAT is included in the purchase price
- Occupational rent - If you plan on taking occupation of a property before the transfer is complete, you have to pay this amount. This amount is normally stated on the Offer to Purchase
- Home Insurance - Just like any other asset, your property must always be insured in the event of fire, flood or any other massive damage. If you are buying with mortgage, your lender will insist that you must have insurance to cover your property.
- Rates and Taxes - When the property transfer is complete, you need to register for rates and taxes, water and electricity services. The municipality would normally charge a deposit and it varies from municipality to municipality. This fee is calculated based on the municipal value of your property.
- Levies - If you are buying a sectional title property (complex or flat), you are charged levies. These costs contribute towards running the complex (repairs, maintenance, etc).
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