Buying a house is one of the biggest, most exciting investments you can make. That’s why it’s so important to understand the true costs involved, so you can be fully prepared.
After 14 years of working at DirectAxis, Tara Viljoen experienced first-hand what it’s like to be a customer – when she needed to apply for a loan to bridge the unexpected expenses of buying her first home.
Here Tara shares insights about what she learnt, and how you can prepare for the unexpected costs of buying a house.
Start Saving Early
Tara’s experience with taking out a loan was a good reminder about the importance of saving. “In my situation, the opportunity to buy property happened suddenly,” says Tara. “If I had time to plan, I would have put money away to prepare for the expenses. So, if you want to buy a house in the near future, you need to start saving today.”
Budget for Bond Registration and Transfer Fees
Bond and transfer fees are unavoidable, and among the biggest costs you have to prepare for when buying a property. You can work out the fees on the property you’re considering by using a bond and transfer cost calculator.
Remember: costs are an estimate and include a bank initiation fee which other calculators may not include. Other factors you should take into consideration are deeds office fees, and other legal fees.
“100% finance from a bank isn’t guaranteed,” says Tara. “As the buyer, you might have to pay a deposit, and only some incorporate the costs of transfer, so make sure you have the funds available.”
Set Aside Money for Moving
Now that you have the house, you need to pace yourself for the move. Consider how you’re going to move: you might want to rely on family or friends for transport or hire a bakkie or a moving company.
“Make sure you get quotes from different moving companies to compare the costs,” says Tara. “Also, ask whether they offer insurance cover for your valuables during the move.”
Consider the Cost of Utilities
Buying a freehold property and not a sectional title? You’ll have to register for water and electricity connection, and your telephone and possibly internet lines.
“Budget for a couple of thousand Rand to get the utilities done,” says Tara. “The cost of these services will become a monthly expense.”
About Maintenance and Repairs
When moving into your new home, you might want to refresh, repair or personalise your new space. “Put money aside for all the things you want to do to make your new house a home,” says Tara. “Repainting, new tiles, new lights, etc. Keeping your home in tip-top shape will be an ongoing process, so always put something aside for those unforeseen household costs.”
Mind the Rates and Levies
Rates cover garbage and sewerage while taxes are worked out against the value of your property. These come with the purchase of a freehold property. These costs differ depending on where you live and range from a couple of hundred to a few thousand Rand per month.
Buying a sectional title means the apartment block’s body corporate has a set monthly levy for the general upkeep of the property.
Include Insurance in Your Budget
Homeowners’ insurance is crucial. It covers structural damage to your property that may occur, and banks require this. You’ll need to take out separate insurance to cover your possessions against theft, etc.
“There are many affordable options out there,” says Tara. “Make sure you do your homework and compare quotes.”
Educate Yourself
Though Tara works for DirectAxis and has seen the process from the other perspective, she still learnt a lot from going through the process herself. “It’s not just hidden costs, but also new terms to learn and credit ratings to check,” says Tara. “Now I can talk about all the extras that come with buying a house and refer others in the same situation to the right people.”
Ask for Help
One of Tara’s biggest takeaways was to ask for help. “Nobody likes to put themselves into debt, but with the transfer costs, attorney fees and more, you might find yourself in need of financial help. “If saving upfront is not an option for you – due to lack of time or money – a loan could help,” says Tara.
Thinking of buying a house? Your credit rating could influence the loan amount you qualify for and the rates you pay. Sign up and learn how to improve your credit rating for free with DirectAxis Pulse.
DirectAxis is here to help – whether you need to take out a personal loan to start the next chapter of your life, or simply need a financial wingman to lean on along the way.
Get in touch with us today to find out how we can help you build your better tomorrow, together.