What costs you’re in for…

Buying a home is a major milestone, but it’s also one of the biggest financial decisions you’ll ever make. While the purchase price might be R1 million, the real cost of buying a property goes far beyond that number. Many first-time buyers are caught off guard by the additional fees, taxes and long-term financial commitments involved in the process. This article breaks down the true costs of buying a R1 million home in South Africa, so you can budget with confidence and avoid nasty surprises.

For a breakdown of what each of these costs, this post contains everything you need to know.

Upfront costs to register a bond

Let’s start with those costs that you need to pay once your offer to purchase has been accepted. These are all once-off costs, paid out in the three months it’ll take to wrap up the home finance and transfer of a property into your name. Play around with various scenarios with our Bond Repayment Calculator.

Bond Registration Costs

When you take out a home loan, your bank will register a bond over the property. This involves attorney fees, which are paid by you, not the bank. You can ask your bank when applying for a home loan to discount the registration attorney fees.

For a R1 million bond, expect to pay:

  • Bond registration attorney fee: ±R20,000 – R30,000
  • Postage, petties & VAT: ±R2,000 – R3,000
  • Deeds Office fee: ±R1,100

Estimated Total: ±R25,000 – R35,000

Bond Initiation and Admin Fees

The bond initiation fee is an administrative cost charged by the bank to complete the paperwork required to initiate your home loan. This is a once-off fee of R6,037. It can sometimes be added to your bond, but you’ll pay interest on it over the life of the bond.

Costs to transfer a property into your name

Transfer Duty

The transfer duty is a tax paid to SARS on every existing property that transfers from one homeowner to another. It is only payable though when buying a property over R1.21 million. The good news: a R1 million property falls below this threshold, so you’ll pay zero transfer duty.

  • Transfer Duty on R1 million: R0

Transfer (Conveyancing) Costs

Even though there’s no transfer duty, you’ll still need to pay the transferring attorney who handles the legal work to transfer ownership to your name.

  • Transfer Attoney fee: ±R20,000 – R30,000
  • Postage & petties + VAT: ±R2,000 – R3,000
  • Deeds Office fee: ±R1,100

Estimated Total: ±R25,000 – R35,000

Summary: Estimated upfront registration and transfer costs for a R1 million property

CostsProperty / Bond value = R1 000 000
Bond registration cost breakdownR37 555
Bond registration costsR28 244
Bank initiation feeR6 037
Deeds Office levy, Postage and PettiesR3 274
Property transfer cost breakdownR37 555
Property transfer costsR28 244
Transfer dutyR0
Deeds Office levy, Postage and PettiesR4 114
Total Bond and Transfer CostsR69 913

Deposits: to have or not to have

Although it’s possible to get a 100% home loan (especially for first-time buyers), many banks prefer buyers to pay a deposit once your home loan has been granted. This is typically between 10% and 20%. A higher deposit improves your chances of approval and reduces your monthly repayments and interest over time and further reducing the amount your home costs you in monthly instalments over the long (20 year) life of your bond. A typical deposit on a R1 million property would be R100,000 (10% of R1 million).

The table below shows the impact that 10% and 20% deposits have on your monthly instalment, as well as the total amount repayable over the loan term. Based on an interest rate of 7.5% and a loan term of 20 years/240 months:

Deposit0%10%20%
Monthly Bond RepaymentR8 055R7 250R6 444
Total amount repayable
over 20 year loan term
R1 933 424R1 933 424R1 546 739
Savings amount over the
lifetime of the loan
R0R93 343R186 685

In short, while owning a home is exciting and empowering, it’s crucial to plan for all the costs – not just the bond. Before you even start your house-hunting journey, speak to a Get Go Home Loans Specialist about calculating not only your affordability, but also the costs you’ll be incurring within the first few months of signing an offer to purchase. A Get Go Home Loans Specialist will be able to assist with your personalised pre-approval, which is an essential step on your homeownership journey. A pre-approval from GetGo Home Loans takes your current financial situation into account to calculate how much additional debt you can realistically take on to finance a new home. Buying wisely today means enjoying your new home with fewer financial regrets tomorrow.