Buying a home

The first thing you need to ensure before buying a property is that you are buying the property in an area suitable for the whole family and whether you would need to move should your circumstances at work change. Buying a property is an expensive process. There are many hidden costs when buying a property and you need to be prepared for it.

It is important for you to understand the costs involved. Some of the more obvious expenses when are the conveyance fees, transfer duty for properties above R 750 000, bond registration costs and the possibility of occupational rent. Over and above these charges, you need to consider the possibility that the bank will not grant you a 100% bond and that you will be required to pay the additional as a deposit. 

The more obscure charges that new property owners often forget to make provision for are your moving costs and packaging material, your deposit to the Municipality for the water and electricity connection. You may even need to consider some security upgrades as well as telephone line installations.

If you are selling your existing property to buy your new property you need to take into account the rates clearance certificate deposit that could amount up to six months of your regular water and electricity bill. Paying an electrician to give you a certificate of compliance and the estate agents commission could be as much as 7% of the properties sale value.

At this point, if you have taken all of the above into account, it is recommended that you consult a CERTIFIED FINANCIAL PLANNER® professional to determine the impact your planned purchase will have on your estate. Not only does your asset value increase, your liabilities do as well. You then need to consider if your will would need updating and the structure you will register the new property in. This could be in a family trust, or maybe you have an ante nuptial marriage contract, meaning the new property could have an impact on your accrual or estate value.

The CERTIFIED FINANCIAL PLANNER® professional will assist you to ensure that you have taken the following monthly additional costs into account:

  • Your bond repayment.
  • Monthly rates, taxes and levies.
  • Insurance on the building structure and or the contents.
  • Change in insurance of your household contents, as the new property might be in a riskier area or the new property does not have all the security features that your old property had.
  • You may need to pay more for your car insurance if the risk has changed, e.g. you now have to park in a boomed area under a car port instead of a locked garage.
  • Increase in your life and disability cover to not only make provision for the debt to be repaid, but also  to make provision for sufficient liquidity to ensure that the property can be transferred from your estate. Should your estate not have enough liquidity, your family might be faced with the tough decision to sell their property to pay the costs.
  • Future taxes e.g. capital gains tax that will affect your estate and might be payable when you sell your property. Primary residences will enjoy a R 2 000 000 exclusion, but should your property be an investment, you would need to pay capital gains tax on the whole capital gain.

After you have considered the above, you now need to plan for the regular maintenance of your property, e.g. painting, possible roof leaks, new carpets, garden and landscaping costs and if your new property has a pool there is the additional costs that you will need to consider on a monthly basis for the upkeep of the pool and its accessories.

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