Buying a home ranks as the most expensive investment people make, but acquiring that dream comes with a price tag significantly higher than the listed price – and that can affect the deposit you have so carefully squirreled away to make that vital down-payment.

Richard Gray says the transfer duty – the government tax paid to the South African Receiver of Revenue on the transfer of property – is the largest additional cost.

“Transfer duty on vacant land is calculated exclusively on the land value, but when buying an existing house, a sliding scale applies to the combined land and building value,” he says.

To minimise the costs on entry-level properties, transfer duties are exempt on properties worth up to R500 000. However, for properties priced between R500 001 and R1 million the government claims 5% of the price, after which the duty shifts to R25 000 plus 8% of the price above R1m.

Gray says transfer duty should not to be confused with transfer fees, which are essentially the attorney’s costs for transferring the property and these are levied according to recommended guidelines.

Buyers also pay about R5 000 in bank initiation fees to cover the costs of reviewing the property before the bond can be granted. Gray says if the bank needs to repossess the property for defaulted payments, the institution wants to know beforehand that the asset is worth the amount loaned.

There are also costs involved in registering the bond, again calculated on a sliding scale depending on the mortgage size. Also, the municipalities also want to ensure their share, which means buyers are levied up to five months in advance on their annual rates and taxes.

Gray says sellers must provide entomology and electrical certificates of compliance which cost about R300. However, there may be other costs involved if the home needs to be tented against bugs and white ants (R4 000) or electrical maintenance.

Meumann White Attorneys’ managing partner, Bruce Forrest, says increasingly buyers must request copies of the municipal plans for the properties they intend buying.

“Too often renovations have been undertaken without planning approval – and that means you stand the risk of buying a property only to discover you have to knock down a section because it traverses the boundary wall,” he says.

Gray says once transfer has been effected, owners must take out homeowners’ insurance and consider taking out life cover. Homeowners’ insurance covers the cost of replacing the building if it is destroyed.

“Think of turning the house on its roof – what does not move is covered by homeowners’ insurance. Life cover, often a bond condition, pays out on the death of the breadwinners or owners,” Gray says.

By choosing Mortgage Plus for a loan, you will get that continual service to make sure you are getting the best deal possible.

CONTACT US

Speak to a home loan consultant about financing your new property or reviewing your existing mortgage. We are able to assist in lowering your bond repayments and securing attorney discounts.

Complete this short form online
Call us on 011.327.4489
Email: morne@mortgagepluscc.co.za

www.mortgagepluscc.co.za

A Bond Originator Works As A Mortgage Negotiator Between You And The Bank

Everyone dreams of buying a home and typically will save for a while in order to secure a down payment. Traditionally once you are ready to purchase your first home you will approach a financial institution for a mortgage. Then you would wait to hear if you have been approved for a mortgage. Things are not necessarily that easy anymore, banks are becoming more difficult to secure a loan from and there are many different banks offering various mortgages rates. The whole process can be confusing; this is why a Bond originator can be helpful.

Bond originators provide a service to you in applying for a mortgage. It is their job to assist you with the process of securing a home loan and get you the best possible rate. A Bond originator actually simplifies the process by acting as the liaison between you and the financial institutions.

Agencies that act as Bond originator’s work for you but get paid by the bank. Their services are free to you the applicant and you never pay them any money. The way they get paid is through the bank when a bond for a new home has been granted.

The originator works directly with you, the applicant, and handles all the leg work associated with securing a bond. These professionals deal with financial institutions on a regular basis. They are educated in all the options that may be available to you the loan applicant.

Since they deal with the banks on a regular basis they have the power of the negotiator and therefore provide you with leverage that you as an individual would not have. Consequently the banks are more willing to work with them since they represent more than just your mortgage. They basically have the advantage of being more than just a single person dealing with the bank.

This leverage can be utilized to provide you with a loan that has a better rate and perhaps shorter-term than you would have qualified had you not used their service. Utilizing an originator to secure your mortgage is a hassle free way of securing a loan and assuring yourself that the terms are the best possible. These professionals can evaluate your financial situation and determine what you may qualify for and what they feel they can pitch to the bank.

Bond originators are becoming the most popular method of applying for a loan for a new home. It is believed that this will eventually be the only way to apply for a mortgage. Under tough economic conditions banks become more and more selective and provide mortgages only to the absolute best applicants. This does not mean that a home loan is out of reach of the average person. But rather that the bank needs more evidence of your ability to pay. The bank originator will convince the bank that you are a viable candidate for a mortgage. If they don’t secure your mortgage they don’t get paid. These are the reasons why you should seriously consider using a Bond originator when you get ready to buy a new home.

CONTACT US

Speak to a home loan consultant about financing your new property or reviewing your existing mortgage. We are able to assist in lowering your bond repayments and securing attorney discounts.

Complete this short form online
Call us on 011.327.4489
Email: morne@mortgagepluscc.co.za

www.mortgagepluscc.co.za