What does a home really cost

The amount of cash you will need for the buying of a property will depend on a few different factors, over and above the price that you see in the advertisement in the paper, or the price that you offer for the property, assuming your offer is accepted.

You may need a deposit
If you are able to put down a deposit it is recommended because it just means you have to pay less back when you apply for your home loan. Some banks offer 100% home loans, which means they will cover the full amount of the purchase price.

In exceptional cases the bank may give you more that a 100% home loan which mean that they will cover the cost of the transfer duty. This is not the best option to go for as you will have a greater principle amount to pay off, and you will more than likely not benefit from a discount percentage off the prime lending rate. ie prime less 2%. This will make your home very expensive.

The more deposit you put down, the more confident that bank will be in lending you the money, and will give you more power to negotiate a good interest rate. Alway remember to negotiate.

Transfer Duty
As per usual the government will have to take their slice of the pie. We all know that there are only two certainties in life, death and taxes, so don't get too bitter over this one.

However if you buy the property in your own name, you will pay less in duty compared to buying as a company, CC, or trust. Legal entities pay a approximately 8% of the gross selling price or the reasonable value of the property, whichever is higher.

Buying in your own name, you don't pay transfer duty for the first R500 000, 5% on the amount above that, up to R1 000 000, and only 8% on the amount above that.

You can calculate the amount of transfer duty using our transfer duty calculator.

Transfer costs
The transfer costs are the legal fees and costs associated with buying a house. These fees will amount to about 3-4% of the cost of the house. They include deeds office charges, bond registration fees, stamp duty and various other sundry expenses.

Ask your estate agent to give you an estimation of what the transfer costs will be, or in the mean time you can use our transfer costs calculator.

So plan your finances carefully and always remember to negotiate. Remember that the better your credit record is with your financial institution, the more chance you have of getting a competative interest rate.

If you would like to know how your credit health stands, Click Here for a credit health report.

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