When taking this big step be careful not to overextend yourself financially.
To ensure that you can afford to buy a home, your bond repayment should not be more than 25% to 30% of your monthly income; and to qualify for a bond you often have to put down a deposit of 10% to 30% of the purchase price.
If you take out the biggest available bond, be sure that you are comfortable to be able to meet your repayments if there is an interest rate hike or an increase in home-ownership expenses.
Owning a home is a keystone of wealth – financial affluence and emotional security (Suzi Orman)
Transfer Duty: This is a tax paid to the South African Receiver of Revenue (SARS) when a property changes hands, and is levied on the value of the land and all improvements on it – usually the purchase price. Properties valued at R600 000 or less are exempt from Transfer Duty. You do not pay transfer duty on property bought from a developer iether, but th e purchase price does (usually) include value added tax (VAT).
Conveyancing Fee: You’ll have to pay an attorney have the property and your bond registered at the deeds office. Theses are called Conveyancing Fees and Bond Registration Fees; and are calculated based on the purchase price. Other attorney fees to be taken into account include: FICA fees, electronic instruction fees, posts and petties; and which vary from one attorney to the next.
Other Monthly Expenses: Besides your bond repayment you also have to factor in additional costs such as homeowner insurance on the building, municipal rates and utilities including electricity and water. Maintenance costs such as garden and pool services and renovations must also be taken into account.
Bank Fees: Banks will charge an initiation fee to cover the costs in finalising the bond registration process and for initial administrative expenses. It may also charge a monthly service fee.
What to look out for when buying
Look out for roof leaks, cracks in walls, floors and swimming pool, and damp marks and mould which may point to plumbing leaks. Check the approved building plans to ensure no illegal structures were erected.
Ask the agent or seller about ant latent (hidden) defects. The seller is compelled to provide information about this. Check on servitudes on or over the property, such as drain pipes or electrical wiring, as these could affect future building plans.