The cost of buying a house: 6 expenses you should prepare for
Buying a house is a significant milestone in anyone's life, but it's important to remember that the initial purchase price is just one part of the financial equation. In addition to the down payment and monthly mortgage, there are several other expenses that you need to be prepared for when buying a home.
To help you navigate these often-overlooked costs, we've compiled a list of six expenses that every prospective homebuyer should factor into their budget.
1. Bond Registration and Transfer Costs
These are among the most substantial expenses associated with buying a home and are typically unavoidable. Bond registration fees are paid to the attorney responsible for registering the bond in the buyer's name, as appointed by the bank. Transfer costs are paid to the conveyancing attorney who transfers the bond from the seller to the buyer, as appointed by the seller. Transfer duty, a tax on property transfer, is also a consideration. Keep in mind that these costs are dependent on the property's value, so the higher the value, the higher the fees.
Use our Transfer Cost Calculator to help you estimate these expenses accurately.
2. Moving Costs
Once you've purchased your new home, you'll need to relocate. Depending on the distance, the amount of furniture you own, and your preferences, you might need to hire a moving company. Obtain multiple quotes to compare costs and assess the insurance coverage for your belongings during transit.
3. Repairs and Maintenance
Even if you've negotiated repairs for patent defects (easily identifiable issues) with the seller, you may still encounter latent defects (hidden problems that only emerge after purchase). Sellers are not obligated to fix latent defects. Be prepared for expenses related to cleaning, repainting, and other miscellaneous repairs to make the house truly yours.
4. Utilities
For freehold properties, you'll need to register for essential utilities such as water, electricity, telephone, and internet. Costs vary based on location and connection types. Research the costs of the registration before the move and set it aside.
5. Rates and Levies
If you've purchased a freehold property, you'll be responsible for paying rates and taxes, which can range from a few hundred to several thousand rand per month, depending on the property's value and location. These fees cover sewerage usage and garbage removal. For sectional title properties, you'll also need to budget for levies, which are set by the body corporate and cover building maintenance. Some areas may have additional levies for added services like security.
6. Home Insurance
Most banks require home insurance to cover structural damage to the property, but this doesn't protect your possessions. Consider purchasing additional insurance to safeguard your belongings, especially against theft.
