Bond Talk |Home buyers Guide 1 | SA Home Loans

20 Dec 2016

Home Buyers Guide 1: I’m Interested In Buying Property

Buying a home is an exciting step towards securing your family’s future – but it can seem daunting if it’s your first property purchase. It’s a big commitment and investment – so you’ll want to make sure you know what to expect.

The first step to having the keys to your new home is to arm yourself with the right information and get some professional guidance.

This blog series takes you through the process of buying a property, so that you know what to expect every step of the way. From what to look for in a home, right through to getting the most out of your bond and familiarising yourself with the technical terms that go along with it.

1. Decide what you’re looking for

There are many homes advertised for sale each week, and unless you have a good idea of what you’re looking for, it’ll take you a long time to find your perfect home. That’s why you should make a list of what’s important to you by asking yourself a few simple questions:

  • What’s your budget? How much can you afford to pay on a home loan each month?
  • Preferred neighbourhood/s and surrounding facilities, like schools.
  • How many bedrooms and bathrooms do you need?
  • Is there parking or do you want a lock up garage?
  • Are you looking for a ‘fixer upper’?
  • Does it need to have a big garden or entertainment area for pets or regular visitors?

2. Understand the different types of properties

Each property has its own type of title, which comes with its own set of rules, costs and bond requirements. So, before you sign an offer to purchase, it’s important to know the differences:

  • Freehold or full title – These are free-standing houses. When you buy a home with a freehold or full title, it means you own the building as well as the land it’s built on.
  • Sectional Title – If you’re looking at apartments, properties within a complex or semi-detached houses, this is the deed you’ll receive. It means you own the building and have an undivided share of the common property like the parking lot or communal gardens.
  • Share-block – This is when an entire building of apartments is owned by one entity, such as a private company, and the individual units are allocated a number of shares in this company. Because of the joint ownership, few financial lenders will offer finance on this type of property, meaning a buyer needs to pay cash, or will need a big cash deposit and pay a higher lending rate from the bond provider.

3. What are the extra costs?

When it comes to affordability, there are several additional costs that buyers often overlook when drawing up their budget. Don’t forget to include:

  • Municipal rates
  • Levies (only applies to complexes or flats)
  • Electricity and water
  • Home insurance
  • Repairs and regular maintenance

Buying a home is filled with legalities and administrative processes, so it’s very important to keep in mind that you’ll have to pay a conveyance attorney and take into account additional once-off fees that will need to be paid. These include:

  • Transfer duty – This is the amount paid to SARS when a home changes hands. It’s based on the value of the property, which means the amount fluctuates.
  • Transfer fees – Unlike the transfer duty, these fee as are paid to your attorney, in accordance with the price of your property, to ensure that the property is officially registered in your name.
  • Bond registration fee – This amount varies from case to case. It must be paid to your attorney for registering your bond with the Deeds Office.
  • Additional legal fees – Your attorney may also charge other smaller costs as part of his bill, including FICA fees, postage costs and electronic instruction bills.

Now that you’re familiar with the general process of buying property, you’re ready to move onto the next step in this Home Buyers Guide series:  how to find the right home for you.

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