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There’s a huge excitement that builds inside of you when you decide it’s time to buy your first home. You spend hours pouring over property ads online, and searching for agents who sell properties in the complexes you’ve eyed enviously as you’ve passed them on your way to work every day. You’ve compiled your list of monthly expenses, and used online calculators to try and get a good idea of how much you can afford to spend on bond repayments each month. With an amount you can spend in your head, you start setting up appointments to view the homes that you’ve already fallen in love with from their photos online.

Your heart screams “Yes! This is the one for me” and then the agent hands you the listing brochure that details all the monthly costs associated with the home. The breakdown shows monthly bond repayments, monthly levies, monthly rates and taxes, average electricity, water and effluent costs, and you suddenly feel like you’ve been sucker-punched in the gut, because you hadn’t included those costs in your budget.

The brochure shows the asking price is R1 780 000, then it mentions that the monthly repayments at 11.75% interest will be R 19 289, and that levies are R2 800 a month, and rates and taxes of R1 500 – also per month. You pull out your phone to do a quick calculation, that comes to R23, 589 a month, and that’s before things like paying your electricity and water. You are feeling decidedly sick now. And then you see the line item showing the total once-off bond and transfer costs of R113 021. You start fanning yourself with the brochure so as not to faint.

The estate agent sees your discomfort and because they are professional and kind, and realise that you’re a first-time buyer who might not understand what goes into buying a home, they suggest you take a seat and they talk you through the process, letting you get a clearer picture of the potential hidden costs.

At Transafrica Property Financial and Legal, we’re passionate about helping South Africans find and purchase their dream home, and we believe a little knowledge can go a long way to helping you understand what you need to know about the property market, so that when you’re ready to sign on the dotted line on your offer to purchase, you will be fully prepared rather than being caught off-guard.

Let’s take a look at the common costs you’ll need to cover and those that you might not have thought about.

Understanding the costs involved in buying a new home

Transfer Duty

When you buy a property, the South African Revenue Service (SARS) levies a transfer duty on the transaction based on the property’s value. Currently properties under R1,100,000 are exempt from transfer duty. For those above this amount, the rates increase progressively. Properties purchase between R1,100,00 and R1,375,000 are charged a 3% duty on the amount above the R1,100,000 threshold.

Conveyancing Fees

Conveyancing fees are paid to the attorney that manages the legal transfer of property ownership. These fees, include VAT, and cover several aspects such as preparation and lodgement of the necessary documents with the Deeds Office. This process can involve three different types of attorneys, including bond attorneys, transfer attorneys, and cancellation attorneys (if you have an existing bond that you need cancelled). The fees are generally calculated on a sliding scale and depend on the property’s purchase price or bond amount​.

Bond Registration Costs

Unless you won the lottery and are paying cash for your home, you’ll need a bond, and you’ll need to pay the bond registration fees. These are paid to the bond attorney that your bank appointed to register the bond on your new property. These are also calculated on a sliding scale based on the size of the bond. You can expect to pay around R27,000 on a R1,000,000 bond.

Deeds Office Fees

In order for your ownership of your newly purchased property to be legally recognised, you will need to pay the fees that the Deeds Office charges for registering the title deed in your name. This fee varies depending on the value of the property.

Bank Initiation Fees

Banks charge a once-off initiation fee for processing your home loan, how much it is will depend on which bank you chose for your bond.

Additional Costs related to the transfer process can include:

• Postage and Petties: Miscellaneous charges by attorneys to cover the cost of courier services and other small disbursements.
• FICA Compliance: Fees charged to verify your identity and proof of residence as required by the Financial Intelligence Centre Act (FICA).
• Occupational Rent: If you move into your new home before the transfer is complete, you may need to pay occupational rent to the seller.

What happens when the transfer is completed?

Remember to include the following additional costs into your calculations when considering buying a property: 

Moving and Setup Costs

Once you’ve been handed the keys to your new home, you’re free to move in, and this is often a cost people forget to include in their budgets. Costs will vary greatly depending on the distance your home contents needs to be moved and the volume of belongings that need to fit on the truck. You’ll also need to set up your utilities, like water, electricity, internet which will all require upfront payments and deposits.

Monthly Ownership Costs

Don’t forget those monthly costs including local municipal rates and taxes, your homeowner’s insurance, and levies if you are part of a sectional title scheme. These will need to be paid in full every month and should be taken into account when you’re working out if you can afford the new home.

Security

If you’re moving into a sectional title complex, for example, then your costs of security will be included in your monthly levy, however if you’re moving into a new home, you might need to factor in expenses such as security services and the costs of electric fencing.

Swimming pool-related expenses

While it is wonderful to have a sparkling blue pool to dive into on hot summer days, remember that there are monthly costs associated with caring for your pool if you want to keep it sparkling blue. Buying a house with a pool means running the pump for a number of hours every day which adds to your electricity bill, there are costs for maintenance including chlorine or salt depending on the type of filtration system. You’ll also need to top up the pool due to evaporation which increases your monthly water bill, and if there is a leak, you could potentially be looking at a large expense.

Tips to help you prepare for the property purchase and transfer process

• Get prequalified for a home loan.
• Use online calculators to estimate your total transfer and registration costs.
• Find out if you qualify for a 105% home loan to cover additional costs that will incorporate the transfer fees into your monthly repayments rather than needing upfront payment.

Everything in good time

Trust your instincts when it comes to buying your new home. If you are worried that you might not be able to cover all the monthly costs associated with a particular home, or price range, take a deep breath and consider your options.

There is nothing wrong with delaying the process until you’ve managed to save a larger deposit so that your monthly costs are less. You can also consider other areas adjacent to your favoured area which might still get you the size property you were hoping for at a more manageable price. Alternatively look at your wish list for your dream home and ask your self what is a must-have and what is a nice-to-have and see if you can find a property in your desired area which covers most of what you need.

Contact us today and let us help you with your bond pre-approval, bond registration and property transfer requirements.

Did you know that you can use property bridging finance to bridge the gap between buying your new property and selling your current home?

At Transafrica Bridging Finance we offer sellers the opportunity to borrow up to 70% of their sale proceeds while they wait for their property to be transferred to the new owner. This bridging finance gives sellers cash on hand to fund their next move.

If your loan application is approved, you can borrow at our unbeatable rate of 0.148% per day (which translates to just R1.48 per R1,000.00 per day). This gives you quick access to funds when you need them most, whether you need the cash on hand to pay your movers, or you need a deposit to buy your next house. We understand that most applications are time-sensitive, and 75% of all applications are paid out within 48 hours.

Our financial solutions are tailored to meet your immediate needs, making your financial journey smoother and more manageable.

How residential property bridging finance can help you

How many stories have you heard where someone has sold their house, but has missed out on purchasing their new home as there have been delays in the transfer process? Whether it is a result of a backlog at the Deeds Office, or the buyer’s bond taking longer than expected to be registered, there are times when the seller doesn’t receive the proceeds of the sale of their home in time to secure their next property.

This is where residential property bridging finance, a short-term loan designed to bridge the financial gap between the sale of an existing property and the purchase of a new one, comes into play.

As the saying goes, “timing is everything” and this is especially true in property. The property transfer process in South Africa can typically take between 8 to 12 weeks, but this timeframe can stretch out depending on a number of factors. By utilising bridging finance, you are able to access the necessary funds more quickly, because these short-term loans are designed to be fast-tracked, providing you with faster access to capital.

This can really help you, particularly in a competitive buyers’ real estate market, where being able to move quickly can make the difference between securing your dream home and missing out.

A big benefit of bridging finance is that it can help you to avoid the costs of moving into temporary accommodation between selling your home and buying a new one. By providing cash to use as a deposit for the purchase of a new home, while you go through the transfer process on your previous home, you’ll be able to settle into your new home without disruption.

It is also useful in situations where the buyer wants to take early occupation of your existing home. Sometimes a buyer will stipulate early occupation as part of their offer to purchase. This can prove challenging to the seller. It could be that you are unable to finance alternative accommodation and storage for your home contents prior to receiving the proceeds of the sale of your home. By accessing funds through bridging finance, you can cover a few months’ rent and storage for your home contents, allowing you to accept the offer and receive occupational rent as well. 

Bridging finance can also assist you during complex property transactions. Sometimes situations like inheritance issues, divorce settlements, or sharing the proceeds from investment properties between shareholders can cause delays in payout of the proceeds of a property sale. Accessing a bridging loan can help you to manage the extended periods between disbursement of funds with greater ease.

Speak to a Transafrica Bridging Finance specialist to learn more about how we can help you to navigate your property sale or purchase with confidence.

Your property is an asset that can help you unlock funds, giving you the financial flexibility you need to make strategic decisions that can positively impact your future. Having a good understanding of the different ways to unlock these funds is important. At Transafrica Bridging Finance, we’re passionate about guiding you through this process so that you can make educated decisions on the best way forward for you, so let’s take a look at the different options available to you.

Before you even start weighing up your options, you need a proper understanding of the value of your home. While you might have an idea of what your property might be worth, having it professionally appraised is important as it will give you a written confirmation of its true current market value. This appraisal will also be important for any of the lenders you speak to during this period, as it will impact the amount that they are willing to lend you. Once you’ve got an idea of what your home is worth, you can chose from a variety of financial services that will suit your needs.

Bridging Finance

This option is suited to a homeowner who is in the process of selling their home. Bridging finance is a short-term loan designed to bridge the gap between the sale of an existing property and the purchase of a new one. In South Africa, the property transfer process typically takes between 8 to 12 weeks, but this can stretch out depending on a few factors. This is where a bridging loan is a hugely valuable tool to unlock cash while you wait for the transfer of your home to go through.

Available from financial institutions and specialised bridging finance companies, this kind of short-term loan is designed to be fast-tracked, providing you with faster access to capital, which you can use as a downpayment on your next home, for moving costs, or to help pay for renovations in your new home. Bridging finance is flexible finance, usually settled when the proceeds of your sale come through and lenders will typically charge a small daily interest fee on the funds required.

Home Equity Loans and Lines of Credit

A home equity loan or a home equity line of credit (HELOC) are financial products that allow homeowners to borrow against the equity they have built up in their property.

• A Home Equity Loan is a lump-sum loan that is secured against your property. The amount you can borrow is based on the difference between your property’s current market value and the outstanding balance on your bond. A home equity loan usually has a fixed interest rate and repayment term.
• Home Equity Line of Credit (HELOC) operate differently to a home equity loan. This loan works more like a credit card, providing you with a revolving line of credit that you can draw from as needed. Interest rates are usually variable, and you only pay interest on the amount you borrow.

Unlocking funds from your Access Bond facility

Many South Africans choose an access bond when applying for their home loan. This is because it allows you to withdraw any extra payments you have made into your bond account. If you make additional payments through the years, you can build up a surplus that is accessible when you need it for whatever reason you might need it. For those close to paying off their bond, there is also the option of keeping the access bond open to use as a loan facility should the need arise, using it to fund further property purchases for example, without having to apply for a new loan.

Refinancing Your Bond

Another way to unlock equity in your home is to refinance your bond. You do this by renegotiating your home loan. In doing so, you may be able to secure a lower interest rate or extend the repayment period. This will help to free up cash flow on a monthly basis as you will reduce your monthly payments. It can also potentially give you access to the equity in your property, if you switch over to an access bond.

Alternative income streams

It might not always be a loan that helps to give you access to funds. Lifestyles across South Africa have changed significantly over the years.  Many people – particularly those approaching retirement, those wanting to reduce living expenses, or those wanting to travel more, are selling their larger properties in favour of smaller, lock-up and go homes, and this step can provide a substantial cash injection which can be used to invest, pay off debt, or enhance lifestyle choices.

The rental market is strong in South Africa, and it’s giving homeowners access to cash in different ways. Empty nesters with larger homes are renting their homes to families while moving into  smaller accommodation and using the income from the rental to pay off the bond on the bigger home. For those who have already paid off their bonds, this is a great way to cover costs of your smaller home, leaving residual income from the remaining rent.

Converting part of your home into rental units is also proving to be a popular choice for many homeowners today as the rental received goes to paying off the bond while the homeowner still has the benefit of living in their own home.

Explore all your options

Unlocking funds in your property process can provide the financial flexibility needed to navigate the South African real estate market effectively. By understanding your property’s value and exploring options such as home equity loans, bridging finance, access bonds, refinancing, downscaling, rental income, you can make informed decisions that enhance your financial position, and help you achieve your property goals.

How Long Does a Property Transfer Take in South Africa?

Buying a property is one of the biggest investments you’ll make, and navigating the transfer process can feel like a cross between running the Comrades Marathon and a game of Monopoly. In South Africa, property transfers typically take between 8 to 12 weeks, but this can stretch out depending on a few factors. Let’s take a look at the steps involved in the property transfer process, the approximate time frames, and what you can expect along the way.

Steps in the Property Transfer Process

1. Offer to Purchase

The journey begins when a buyer falls in love with your home and submits an offer to purchase (OTP). This is a written agreement between you and the buyer that outlines the terms and conditions of the sale. It will include the price the buyer is willing to pay and any conditions that may impact the sale, such as all curtains to stay in the home, or that the offer is subject to a clear home inspection by a professional inspection team. You might not accept the buyers first offer, and there may be some negotiating, however once both parties have agreed to the terms, the offer is signed, and it becomes a binding contract.

Time Frame: 1-2 weeks

 Key Activities: Negotiation of terms, agreement signing.

2. Bond Approval

If the buyer is financing the purchase with a home loan, the next step is bond approval. The buyer applies for a bond from a bank or financial institution. The bank will conduct a credit assessment and property valuation to determine if they will grant the loan. If you are fortunate enough to have a cash offer, this stage of the process could move more quickly.

Time Frame: 2-4 weeks

Key Activities: Application submission, credit checks, property valuation.

3. Appointment of Conveyancer

Once the bond is approved, a conveyancer (an attorney who specialises in property) is appointed to manage the transfer process. Typically, the seller nominates the conveyancer, but both parties must agree. Remember to do your homework. You don’t have to use the conveyancer recommended by the estate agent. It’s always a good idea to check references on the conveyancer to make sure that previous clients have been happy with their services.

Time Frame: Immediate upon bond approval

Key Activities: Appointment and engagement with the conveyancer.

4. Preparation of Transfer Documents

The conveyancer prepares the necessary documents for the transfer. This includes obtaining clearance certificates from the local municipality, confirming that all rates and taxes are paid up to date, and in the case of the home being in a residential estate, whether it is freehold or sectional title, that the seller’s levy account is up to date.

Time Frame: 1-2 weeks

Key Activities: Document preparation, request for clearance certificates.

5. Signing of Transfer Documents

Both the buyer and the seller must sign the transfer documents. The conveyancer arranges meetings for the parties to sign these documents, which can be done either in person or through a secure digital platform.

Time Frame: 1 week

Key Activities: Scheduling and signing of documents.

6. Lodgement in the Deeds Office

Once all the documents are signed, the conveyancer will lodge them with the Deeds Office. This is a critical step where the property transfer is officially recorded. The Deeds Office examines the documents to ensure everything is in order. If any documentation is missing, the examiner will request further information from the attorney before continuing.

Time Frame: 2-3 weeks

Key Activities: Document lodgement, examination by the Deeds Office.

7. Registration of Transfer

Once the Deeds Office approves the documents, the property is officially transferred to the buyer. The buyer’s bond is registered simultaneously. The buyer becomes the legal owner, and the seller receives the proceeds from the sale, less any fees to the estate agent and conveyancing attorneys.

Time Frame: 1 week

Key Activities: Approval and registration of transfer.

Factors Influencing the Timeline

While it usually takes about 8 to 12 weeks to complete the property transfer process, there are a number of factors that can influence this timeline:

• Efficiency of the Conveyancer: An experienced and efficient conveyancer can expedite the process, however if the conveyancer is slow or inexperienced, delays could occur.
• Buyer’s Financial Preparedness: As the seller, there is little you can do to prevent delays when it comes to the buyer obtaining bond approval, and this can significantly extend the timeline. As a buyer, do your best to make sure that all financial documentation is in order as this can speed up the approval process.
• Municipal Delays: All South Africans understand the challenges of dealing with Eskom or City Power, and local municipalities, which is why obtaining clearance certificates from municipalities can sometimes be slow, especially in larger cities or during peak periods.
• Deeds Office Backlogs: The Deeds Office may have backlogs, particularly during peak seasons or due to administrative delays. In South Africa backlogs happen a lot, so it’s always good to ask your conveyancer what the average lodging time is, at the time of your sale, as it will help you to manage your expectations.

Tips to Expedite the Process

• Choose a Reputable Conveyancer: A good conveyancer can make a world of difference, while a slow one can make you feel like you’re stuck in peak hour traffic when every light is out, and the informal traffic wardens are manning the intersections.
• Prepare Financial Documents: Having all your ducks in a row can prevent delays. As a buyer, it is your responsibility to make sure all necessary financial documents are ready and complete to avoid delays in bond approval.
• Stay in touch: Regular communication with your conveyancer can help identify and resolve potential issues promptly. Never assume that things are running according to plan, and don’t be afraid to ask questions if you’re not sure about particular points in their update communications.
• Plan Ahead: Be aware of potential delays and plan accordingly, if you are the seller, and you need cash to cover the move out costs or to put a deposit down on your next home, consider bridging finance to cover you until the sale goes through. If you are the buyer, you need to make sure you have a contingency plan in place in case the transfer takes longer than expected. There is always the option of paying occupational rent if the seller has vacated the premises early or perhaps the moving company can keep your home contents in storage till your move in date is finalised.

Making your property transfer as hassle free as possible

Understanding the property transfer process and being prepared can help ensure a smooth and timely transfer of ownership. While the typical transfer period in South Africa ranges from 8 to 12 weeks, being proactive and informed can help you navigate this complex process with confidence. Whether you’re a first-time buyer, or a seasoned property investor, knowing what to expect can make all the difference in your property transaction experience.

At Transafrica Property Financial and Legal, we ensure that the process of transferring the property from the seller to the buyer happens without any hassle while keeping you in the loop. Contact us today for all your property transfer needs.

5 essential steps that will make your home loan application easier and more successful

Embarking on the journey to homeownership is both thrilling and challenging. One of the critical steps in this process is applying for a home loan. Navigating this process can be smoother and more successful if you’re well-prepared.

Here are five essential things you need to do before applying for a home loan:

1. Maintain a strong credit record

Your credit record plays a pivotal role in the home loan approval process. Lenders want to know that you will repay the home loan. How you’ve managed your debt in the past shows lenders whether or not you are financially responsibility and if you have managed your previous debts well. A solid credit history can significantly boost your chances of getting a home loan approved.

Here’s how you can ensure a good credit record:

• Pay all your bills on time, including credit cards and utilities.
• Keep your debt levels manageable.
• Regularly check your credit report for accuracy, and address any discrepancies.

In South Africa, you are entitled to one free credit report annually from each of the major credit bureaus. Reviewing your credit report before you apply for a home loan can help you spot and correct any issues that might affect your application.

2. Have secure, stable employment and income

Lenders want assurance that you have a reliable income source to manage the monthly repayments on your home loan. Typically, you will need to provide:

• Payslips for the last three to six months.
• Bank statements for the same period.
• For self-employed individuals, audited financial statements and a letter from your accountant confirming your income.

If you are submitting a joint application with a spouse or partner, both parties will need to provide the above documentation during the application process as the banks or bond originators will assess your affordability based on both incomes.

Having a stable job and consistent income shows lenders that you have sufficient, regular income, and thus the ability to pay your debts. A full-time, steady job indicates that you are a low-risk borrower and increases the chances that your home loan application will be approved.

3. Save for a Deposit

While it’s possible to obtain a 100% home loan in South Africa, having a deposit can significantly improve your approval chances of securing a bond, and it can reduce your monthly repayments. Having a deposit shows you are prepared for and committed to homeownership. It is recommended that you save around 10% to 20% of the property’s purchase price for the deposit.

By contributing a deposit, you reduce the amount you need to borrow, which can lead to lower interest rates and more favourable loan terms.

4. Gather Proof of Identity, Marital Status, and Residence

To process your home loan application, lenders will need to verify your identity and current address. This step ensures compliance with legal requirements and confirms your details. You’ll need to provide:

• A valid South African ID or passport.
• A copy of your marriage certificate, and confirmation of the type of marital contract, e.g., whether you were married in community of property, or whether you were married antenuptial with accrual.
• Proof of residence, such as a recent utility bill or lease agreement showing your current address.

Having these documents up to date and readily available will help to streamline your application process.

5. Obtain a Pre-Approval Certificate

Securing a pre-approval certificate from a lender can give you a competitive edge when house hunting. A pre-approval certificate indicates that you qualify for a home loan up to a certain amount, based on an initial financial assessment. This certificate:

• Provides a clear understanding of your budget for purchasing a property.
• Shows estate agents and sellers that you are a serious buyer with financing in place.
• Can expedite the final approval process once you’ve found your dream home.

To get pre-approved, you will need to submit the documents mentioned above, to your lender for an initial evaluation.

Let us help you by taking the hassle out of financing your new home

Applying for a home loan in South Africa doesn’t have to be daunting if you’re well-prepared. By ensuring you’ve followed the five essential steps mentioned above, you can significantly enhance your chances of getting your home loan application approved, bringing you closer to the dream of owning your home.

At Transafrica Property, Finance and Legal, we believe everyone deserves a place to call home. We’re here to make your home loan application journey as smooth as possible for you. We have streamlined the application process to take the hassle out of home financing, so contact us today and let us help you secure the home you’ve always wanted.