Essential tips for budgeting transfer and bond registration fees

One of the major expenses beyond the purchase price of a home is transfer costs and bond registration fees. It can take time to save up enough to cover these upfront costs, so the sooner buyers start thinking about this, the better.

“Buying a home is a significant financial commitment, and many first-time buyers often overlook the additional costs involved in the process. Understanding these costs and planning for them in advance can help you avoid financial strain when it comes time to finalise your property purchase,” advises Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.

He explains that when purchasing a property, buyers are responsible for covering the transfer duty (if applicable), conveyancing fees, and bond registration costs. These costs vary based on the purchase price of the property and the size of the home loan.

For example, if you are purchasing a home for R1.5 million, the estimated costs are as follows:

Transfer duty: R 12 000

Property transfer costs: R 35 392

Transfer deeds office fees: R 1 544

Post, petties FICA, other fees: R 2 000

Total transfer costs: R 50 936

Bond registration cost: R 35 392

Bond deeds office fees: R 1 544

Post, petties FICA, other fees: R 2 000

Total bond costs: R 38 936

Total additional costs: ±R 89 872

These costs need to be paid upfront and typically cannot be included in your home loan. If you do not have enough savings to cover these costs, you might have to consider a personal loan or bridging finance options.

“Financing these costs will carry additional interest charges and will require monthly instalments in addition to the home loan repayments. For these reasons, it is far better to cover these costs from savings rather than debt,” Goslett suggests.

To help buyers create a plan for how to cover these costs in cash, RE/MAX of Southern Africa shares the below tips:

1. Start early
2. As soon as you decide to buy a home, begin setting aside money for transfer fees. Use an online calculator, like the one on BetterBond’s website, to work out how much you will need, and then create a savings plan to help you reach that amount.
3. Set up a dedicated savings account
4. Open a separate savings account specifically for your home-buying costs. Look for high-interest savings accounts or investment options that can help your money grow while you save. Keeping this money separate will also prevent you from accidentally spending it on other expenses.
5. Ask about special deals or discounts
6. Some banks offer incentives, such as covering or discounting the bond registration fees, if they are trying to beat quotes provided by other banks – that’s why it’s so important to shop around or to work through a bond originator to ensure that you get the best deal on your home loan. Don’t be shy to ask your transferring attorney for discounts either - be sure to explore your options and negotiate where possible.

“Being financially prepared for transfer fees ensures a smooth and stress-free property-purchase process. By understanding the costs involved and implementing a dedicated savings plan, you can confidently take the next step towards homeownership without unexpected financial strain. Start saving today so that when the time comes, you’ll be ready to secure your dream home with ease,” Goslett concludes.

PERSONAL FINANCE