22 Mar Transfer costs explained for first-time home buyers
Most first-time home buyers do not anticipate what bond registration and transfer costs amount to. Failing to budget for these expenses can lead to unnecessary stress during the transfer.
For first-time home buyers, transfer costs can come as a bit of an unexpected (and un-budgeted) surprise. After all the effort to save for a deposit, and meticulously calculating your future property-related costs down to the last cent, the last thing you need is extra expenses required on demand to ensure the transfer goes through. Read below to make sure you’re truly prepared to sign that offer-to-purchase.
What Are Transfer Costs?
Transfer costs are not the same as transfer duty on a property. Rather, transfer costs comprise of a number of expenses, including transfer duty, that needs to be paid to the transferring attorneys before transfer (up to six weeks before). They include the following:
1. Transfer Duty
Transfer Duty is a tax (payable to SARS) levied on the value of a property above R1 000 000, to transfer the property to the buyer. This accounts for quite a large proportion of the costs involved in purchasing a home. Click here to calculate transfer duty.
2. Transferring Conveyancer’s Fee:
This is a fee payable to the Transferring Attorneys to transfer the property in your name. The amount varies depending on the property price and the law firm, but the fee is based on the Law Society’s recommended tariffs. Your estate agent or chosen attorney can provide you with a pro forma quotation before you put in an offer on a property. For a R1 million property, expect to pay approximately R22,000 and for a R10 million property, approximately R80,000.
3. Transfer Postage and Petties
These are disbursements to cover small expenses like printing, e-mails, drafting, and posting documents to other parties, including you. The amount, once again, varies from law firm to law firm, but it’s usually fixed. Look at spending somewhere in the region of R1 000.
4. Other Fees
These include rates clearance certificate fees to the municipality and electronic rates request fees (for the facilitation of the certificate). These fees usually amount to around R2 000.
5. Deeds Office Registry Fee
This is a government disbursement payable to the Deeds Office for the Title Deed and legal transfer and registration of your new home into your name. The amount is fixed according to the purchase amount.
What Are Bond Costs?
Yes, there are more costs. Bond costs are payable to the bond registration attorneys (chosen by the bank or financial institution) before the date of registration. It amounts to less than the accumulative transfer costs and includes:
1. Bond Registration Conveyancing Fees
These are for the service the bond registration attorneys provide to get your bond registered. The fee is based on tariffs recommended by the Law Society. The amount will vary according to your home loan amount and may differ from one law firm to another.
2. Bond Registration Post, Petties, and Other Fees
The Bond Attorneys also charge disbursements to cover small things like posting documents. Similar to the transfer petties, expect to pay around R1 000.
3. Bond Registration Deeds Office Registry Fee
This is a fixed fee charged by the Deeds Office for the legal registration of your mortgage bond; the amount is determined by the amount of your home loan.
However, there may be other costs involved, such as levy clearance and insurance certificate fees (for sectional titles) and homeowner’s consent fees (where such home owners’ associations exist).
Ask a conveyancer you trust to provide you with a pro forma statement so you can accurately plan for the expenses involved.