5 Things First Time Property Buyers Should Know
Throughout the process of
house hunting and searching for your perfect home, it is easy to overlook important drawbacks whilst admiring the charming aspects of a new home.
Buying property can be one of the most important purchases you will ever make, so be prepared and have a plan before diving into the thrill of house hunting.
1. How much can you afford
The first thing you need to do is to decide how much you can afford. You will need to look at how much money you have available yourself and how much you can borrow. New property buyers are sometimes caught off guard when they start receiving calls and statements from different attorneys who are involved in the transfer and registration process of the property.
Keep in mind that there are additional costs which are not included in the purchase price such as:
• Bond Registration Attorney’s Fees;
• Transfer Attorney’s Fees;
• Transfer Duty;
• Consents for Home Owners Associations;
• A Home Loan Initiation Fee, which is charged by the bank (currently R 5 985.00 (Incl. VAT);
• Homeowner's Insurance for Properties which are not classified as Sectional Title which the bank will insist that you take out to cover the property and the permanent structures on it, against natural disasters like fire or hail storms;
• Home Loan Life Insurance cover which the bank might request as a condition for your bond;
• Occupational Rent which is payable by the buyer to the seller, should the property be occupied before the date of registration;
• Moving your house. Consider costs such as moving your furniture and other ongoing costs to ensure that you're settled in your new house.
2. List your Priorities
Ask your estate agent if he or she does have a buyer property checklist – to help you with keeping notes on all properties you view. To help you keep on track, list some of the most important things that you are looking for in your future home:
• What you can afford;
• The Area you want to live in;
• Local amenities that are important to you, such as schools, retail, healthcare and sports facilities;
• Traffic flows and noise;
• Potential rental income to be acquired by future tenants;
• En suite bathrooms;
• Indoor braai facilities;
• Pool
• A brand new home/renovators dream;
• Garage
• Garden
It is important to choose your top five or three must-haves.
Once you are viewing a few properties, all sorts of charming features are bound to sway you, and your list can help you stay on track.
3. Ask important questions to the Estate Agent
It’s the responsibility of the buyer to find out what the costs are regarding the rates, taxes and levies charged to the prospective new home owner.
Unfortunately, many new home buyers do not know what sectional title ownership involves, and the restraints and obligations it imposes. It is only after they move in that they wish they had conducted a thorough due diligence of what they were buying into.
A professional estate agent can assist a buyer in determining the future costs of the property including levy rates, the size and the age of the property which could have a direct influence on structural maintenance in future.
4. Read the fine print
Before signing the Offer to Purchase, read every detail as to what the sale includes and what duties are imposed on the seller or the buyer.
• What is the amount of the occupational rent?
• What date will occupation be taken?
• Is the sale subject to vacant occupation?
• What date is transfer scheduled?
• Is the Exclusive Use Area (Parking Bay) (Garden) (Garage) included in the property description?
• What is the consequences and costs of cancelling the sale by either party?
• What certificates need to be obtained prior to registration? (Electrical, gas, or beetle certificates)
Please do note that an Offer to Purchase is a very important legal document that needs to be in writing and which has legal consequences.
If you do not understand the contents of the Agreement, it is within your right to ask for legal assistance before signing on the dotted line.
5. Remember to Notify your Current Bank
Another very important cost to consider is one which applies to existing homeowners with bonds and who have the intention of selling as well. Please do make reference to the “cancellation clause” in your Home Loan Agreement.
Banks have a 90-day cancellation clause, meaning that if you do not cancel your bond in time, you will unfortunately incur pro rata cancellation penalties when selling.
If no notice has been given by a seller to his or her bank, the bank will regard the request for cancellation figures by the Bond Cancellation attorneys as a cancellation notice letter.
The penalty fee will then be reduced depending on the period of time taken to register the transfer of the property. This means that if the transfer is registered on day 60 of the 90-day notice period, the penalty will be reduced by two thirds and if registered on day 90, the charge will be nil.
In certain cases, sellers can also request for registration to take place only once the 90-day notice period has expired in order to avoid the penalty costs.
Author Lisbe Venter – Velilo Tinto Attorneys
