Costs Involved In The Transfer Process

(A broad outline of the costs involved) 

PURCHASER

• Transfer and bond registration costs:
  A Transfer duty or VAT (for purchase price above R1 mil) and other transfer costs
  B Bond registration costs or bank guarantee cost (if applicable)
  C Bank initiation fee is charged by the bank for processing of the bond application.
  A+B+C = Total costs
  
   
• In case of a cash transaction the transfer attorney will confirm when money is due.
• Deposit (if applicable), plus costs A + B + C
• Cash deposit fees:  R16,00 + R1,50 for every R100,00
• In case of a cash transaction, the bank guarantee fees would be the responsibility of the purchaser.
• Occupational rent is payable upfront and is not deductible from the purchase price.
• Insurance: Life-, Building- and Household content insurance

SELLER

• The Seller will need to acquire a rates and taxes clearance certificate from the local municipality. The fee is charged to make sure that rates and taxes on the property will still be paid while the registration process is underway. Consequently, the municipality usually ask for between two to six months upfront. The municipality will refund you after the registration process is completed. Special levies could also be charged, roughly 3 months’ worth of levies upfront before the registration of sale. Sellers should speak to the HOA of Body Corporate to find out about these costs.
• The Seller needs to consider the bond cancellation fee. It is the responsibility of the seller to give their bank written notice of their intent to cancel a bond. The notice period may differ from bank to bank but as a rule your bank will require 90 days’ notice. If you struggle to find a buyer, please notify your bank, otherwise penalties will be occurred. The bank will advise your attorney to attend to the cancellation of the outstanding capital amount and interest, plus any other costs that are required to settle the account. Bond cancellation figures include the outstanding loan balance, one months instalment, monthly service fee, Home Owners insurance fee, bond protection premiums if applicable, early termination charge, legal fees if applicable and interest calculated from date that the figures are issued to when payment received.
• Further expenses which need to be covered before the transfer can go ahead is that of various compliance certificates (electric, plumbing, gas, beetle, electric fence - if applicable) required during the home inspection process. Sellers will also have to cover the costs of addressing any issues that are pointed out in order for the certificate to be issued.
• Common property certificates – extra cost for lost certificates provide by the Body Corporate.
• Additional certificates (where applicable): Borer Beetle, Borehole / Plumbing, Asbestos Certificate.
• If you are renting the property to a tenant, keep in mind that you will need to repay their deposit with interest. You should also make room in your budget to pay for any possible repairs in case there are any damages to the property after they vacate.
• Lost Title Deed – go to deeds office, complete form, and pay the required fee.
• Approved building plans – any additions and or improvements to the Property, have been made, only after the required consents, permissions and permits to do so were properly obtained from the relevant local authority.
• Immovable property condition report or Property Inspection cost..
• Agents’ commission payable

OTHER COSTS TO CONSIDER ...

• Deposits for water and electricity connections in Purchasers name after transfer.
• Cost of moving, new curtains, carpets, furniture etc.

USEFUL TIPS:

• When thinking of buying property it is always good to get your financials in order as soon as possible.
• Talk to a Bond originator, ask your estate agent to recommend someone, to inform you what is needed when applying for a bond.
• It is also particularly important to get yourself pre-qualified to know exactly what amount you qualify for.
• By saving up for a deposit you may be in favour for a better interest rate, as the financial institutions risk is reduced.
• A good credit score is based on credit history: number of open accounts, total levels of debt, and repayment history. Banks will look favourably on your home loan application if you have a good credit history.
• Make sure your accounts and loans are up to date and paid regularly, this have a huge impact on your credit rating and to qualify for a bond.
• Check your ITC scoring through your Bond Originator, this will give you a clear indication of outstanding accounts which you can settle in time before bond application is submitted.
• Any unpaid and bad debt will reflect negatively on your credit record and will influence your bond application.
• A Bond originator will also advise you on fixed or variable interest rates and the benefits and consequences thereof.
• Be aware that you may apply for a better interest rate on existing bonds every 6 months. This could save you a lot of money.
• Your Bond originator will inform you what important aspects is considered by the different Financial Institutions with a bond application, application vary according to client’s earnings, disposable income, credit scoring and age.

DEPOSIT OR 100% LOAN?

Estate agents and sellers are more confident when a prospective buyer has a deposit. The buyer's chances of getting a bond approved are higher, so their offer is more appealing than a buyer whose offer is conditional on the sale of another property or raising a 100%-bond.

In addition, when the banks consider whether or not to grant a home loan, they take into account factors such as earnings, disposable income, credit record, age, length of time the applicant has been in their current job and the size of their deposit. The larger the deposit, the smaller the risk for the bank when granting a home loan, and the more the homebuyer saves over the bond term.

Banks are also more likely to be negotiable on the interest rate because they are taking a lower risk with a deposit. By providing capital upfront, the amount owed on the property is decreased, so a smaller bond is required, which reduces the amount of interest owed and places the buyer in a much better financial position.