Tim Akinnusi of Nedbank talks about the extra costs that will be incurred, aside from the purchase price, when buying a home.
Reporter: Buying a home is one of the most important steps in your life, whether it's your first home or an upgrade. Therefore, being informed on some of the extra costs involved over and above the purchase price can make a huge difference and make your home-buying experience much easier. We're joined by Tim Akinnusi, head of sales and client management at Nedbank Home Loans. Welcome to the loft, Tim.
Tim: Thank you, Bonnie.
So, Tim, what other extras costs do buyers need to be aware of, over and above the purchase price?
One of the common mistakes that consumers make is they only consider the cost of the bond and the affordability, and not the extra costs that we are going to talk about today. And the extra costs are really the cost of acquisition, as well as the cost of maintenance. Now, the cost of acquisition is the cost that you would incur to have the property transferred into your name. So there are lawyers involved, so you'd need to pay the registration costs for your property to be registrar at the deeds office. You would also need to pay the initiation fee to the bank, for them to set up the account for you and to maintain the account. And thirdly, you have to pay transfer costs, which is in essence a tax to the government. So the first R750 000 of the property value is exempt from that tax. And the balance of that, you pay transfer duties on. If you are building a new place or buying a house that is being built by a developer, those costs are either voided or are inclusive in the price of the entire unit. Then the second cost is around the maintenance. Now that's the interesting one, because that's an ongoing price that you pay as long as you continue to have the house and live in it. So that's your cost of your levies if you're in a sectional title, which comprises of your maintenance costs in the garden, the security you pay, and some insurance. Then the other cost is your rates and taxes. In a standalone situation, you'd be paying your rates and taxes. And obviously, you then have the flexibility on what to pay for security and the cost of gardening, etc. So those are the two main costs that you need to contend with. As long as you are a homeowner, you'd always have those two costs, and that's over and above your bonded payments.
Wow. How can one calculate these costs?
So, what we've understood over the last couple of years, is that clients really battle with understanding exactly all the costs that's involved in actually maintaining and paying off their monthly instalment. So we've designed an app called Instant Bond Indicator, it's on our website. And essentially, that's a 14 field application where you put in the cost of the property and your personal details, and will make a real time scoring, a real time call to credit bureaus to give you a sense of your credit health as well as your affordability. And we will then play back to you results that would include not only the cost of your monthly payments in the property, but also the cost of the transfer that you would pay and the registration that you're likely to be faced with. And that would give you a really good sense of exactly what costs in total you are expected to be in for.