In a nutshell, over and above the actual cost of the property, a buyer needs to set aside money for bond origination costs, transfer fees and transfer duties. The bond repayment is made to the bank every month for the agreed upon period, transfer duty is a tax based on the value of the property and is paid to SARS, while the transfer fees cover the costs for transferring the property into the buyer’s name (the conveyancing fees) and for registering a bond.
“Once a bond has been granted and the buyer has accepted it, he or she will pay fees to register the bond and to transfer the property. The buyer will always be required to pay these fees, while transfer duty need only be paid if the property costs more than R900 000,” says Grant Wheeler, Director of Strategy and Expansion: Engel & Völkers Southern Africa.
“As a rule of thumb, the buyer should allow for between 8% and 10% of the amount of the purchase price for all the other costs involved in purchasing the property excluding a potential deposit. In addition to these expenses, buyers should also make provision for additional charges, which can include rates and clearance certificates and prospective taxes amongst others,” says Wheeler.
Conveyancer’s Fee. The conveyancer's fee for bond registration covers the service of getting the bond registered over the title deeds. The amount varies in relation to the home loan amount. While the fee is based on tariffs recommended by the Law Society, it may differ slightly from one law firm to another.
• On a bond of R 650 000.00 the fee is approximately R 8 400.00 excl. VAT.
• On a bond of R 2 000 000.00 the fee is approximately R 16 560.00 excl. VAT.
There are also sundries to be paid. The amount is usually fixed and each law firm has its own rates. The average is R650.00 excl. V.A.T. per bond. The charge covers small things like posting documents to other conveyancers, the bank, the estate agent, the Deeds Office, to the buyer etc.
Attorney’s Fees are always subject to VAT being added.
Deeds Office Registry Fee. This fee is charged by the Deeds Office for the legal registration of the mortgage bond.
Transfer duty is a tax that is payable to SARS and is based on the value (not the selling price) of a property.
Below are the transfer duty rates applicable on property purchased between 1 March 2018 to 28 February 2019:
A Home Loan or Bond Initiation Fee is charged by the bank for the processing of the bond application. Some banks work on a base fee plus a percentage of the loan amount, other banks charge a flat rate of approximately R6037.00 (Incl. VAT).
“A reputable real estate company will assist buyers to understand the fees and expenses involved in the purchase of property. Ensure that you deal with a company that is professional and offers comprehensive advice, especially if you are a first time buyer,” concludes Wheeler.