Author: Kelly TK Masoek
First-time buyers, is a term normally given to those individuals who are embarking on their home buying journey for the first time. It can be said that a first-time buyer has no record of owning immovable property and has no experience in dealing with this type of transaction. Read more about First time homeowners and what to expect.
So legally, what can one expect from a first-time home buying experience?
The costs associated with purchasing a home as first time homeowners
Some of the costs one can expect when purchasing a property include but are not limited to:
– A deposit (applicable when a bank approves a lower offer mortgage bond)
– Initiation fee (charged by the bank to initiate your mortgage bond (and can be added to the capital bond or can be paid upfront)
– Transfer Duty (payable to SARS and is a once-off tax payment levied when the purchase price exceeds one million rand)
– Transfer costs (fees paid to the transferring attorney for registration of transfer of the property)
– Bond registration costs (paid to the bond’s attorney for registration of the bond over the property)
– Pro rata levies and levy clearance (Only applicable with Sectional Title transfers and are fees paid to the Body Corporate before they will issue levy clearance required for transfer)
– Home Owners Association Consent Fees (Only applicable if the property is subject to obtaining a Home Owners Association consent prior to transfer and are fees paid to such Home Owners Association)
– Occupational rent (only applies in the event of you taking occupation of the property prior to registration of transfer – the sum is usually stipulated in the Agreement of Sale or can be agreed upon between all parties in an Addendum to the Agreement of Sale)
There are further costs a purchaser would need to make provision for post-registration which include moving costs, home owners insurance premiums (covering the structure of the property), life insurance premiums (sometimes insisted on by the bank and covers the capital bond or part thereof in the event of your death), home contents insurance (optional, and covers your home contents), rates and taxes payable to the municipality, levies payable to the Body Corporate (if purchasing a Sectional Title property) and lastly services such as water, electricity, sewerage and refuse.
Ways to assist a first-time purchaser with costs:
Some financial instructions may grant a purchaser loan in excess of the purchase price, for example a 110% loan, and the additional 10% granted can be used towards the costs of transfer and bond registration.
There are a number of things available to first time buyers could possibly further qualify for FLISP which is a government subsidy, issued by the Department of Human Settlements, that works as a grant which does not need to be repaid. It offers first time home buyers the opportunity to get out of the “rent trap”. The Qualifying criteria includes but is not limited to maximum earnings of R22 000 and a minimum of R3500, and is reserved for those first-time buyers who are over the age of 18.
How long will the transfer and bond registration process take?
A standard transfer, involving a bond registration and sellers bond cancellation, takes approximately 8-12 weeks.
Once the Agreement of Sale has been signed by the seller(s) and purchaser(s), and all suspensive conditions have been fulfilled, the transferring attorney will commence transfer. The transfer process involves signing transfer documents, obtaining rates clearance, obtaining levy and home owners clearance (if applicable) and obtaining compliance certificates for the property.