5 Unexpected Expenses Buyers Often Overlook
Category Advice
The home buying journey is such a rewarding experience, however it can be a tricky process. Although finding your dream home brings along a lot of excitement, it's crucial to prepare for the unexpected.
There are many hidden costs that home buyers often forget about along the journey. That's why we are highlighting five often-overlooked expenses in today's article. Take a moment to familiarise yourself with them, to ensure a smoother path towards homeownership.
Five Expenses Buyers Often Overlook
1. Utilities costs
The same costs seen with renting, many buyers tend to forget about the utility costs associated with the home buying process. These costs can potentially increase if the square footage of the property is larger than the previous. Larger homes often result in higher monthly bills and new chargers that may arise when buying a property. Utility costs are often overlooked when renters become buyers, as these utility costs were likely included in the renters' agreement.
To avoid overlooking these costs, do research with your utility providers and inquire about the average amount for your monthly bills and budget accordingly, as these rates can differ depending on the region.
2. Legal fees
With purchasing your home, a larger part of your budget should be dedicated to the various legal fees associated with conveyancing attorneys, bond attorneys and transfer attorneys. These professionals handle the various aspects of the transactions, registering bonds, cancelling the existing bond and transferring ownership.
It is important to note that transfer attorneys are appointed by the seller but paid by the buyer. Transfer attorneys are responsible for registering the ownership in the new buyer's name and their fees are based on the property's value.
3. Transfer and bond initiation costs
This is typically one of the substantial expenses that stems beyond the property purchase price. Transfer fees are paid to SARS within 6 months of the property transfer. If the seller is VAT registered, the VAT may apply instead of the transfer fee and is commonly seen in new development property purchases. It is important to note the latest SARS Transfer Duty tables.
With regards to your bond initiation costs, this is a fee that your bank will charge for setting up and opening your bond, typically not exceeding R6,037. You can choose to add this fee to your total bond amount, although paying it upfront will save you from additional interest charges.
4. Property taxes and levies
With property registration, buyers are required to make upfront payments to cover one to two months' costs for municipal rates and body corporate levies. These costs include the rendering of services provided by the municipality, such as rubbish collection, sewerage and property taxes based on home value.
After registration has been completed, homeowners are required to provide deposits for water and electricity accounts. However, for sectional title properties, monthly levies are also mandatory.
5. Insurance
When trying to obtain a bond, homeowner insurance or structural replacement insurance is required in addition to your household insurance. These costs can differ, therefore it is advised to explore other options that best suit your budget. It is important to keep in mind that Life cover might also be required based on your credit score or risk assessment for the loan agreement.
The SAproperty.com Team is here to help you
Although these costs can seem daunting and overwhelming, remember that our team of experts are here to help you with any questions or enquiries you may have along the way. Whether you need assistance with the home buying process or finding your dream home, don't hesitate, contact us today to get started.
Author: SAproperty.com
