By Nico Strydom
Buying a home is probably the biggest financial transaction you will ever make, so it is essential that you do your homework in order to ensure that it does not turn into a financial nightmare.
Hidden costs can occur at different stages of the home-buying process. For starters, the price indicated on the for-sale board is not the full amount you will need to buy a property. There are various administrative costs, such as a deposit, transfer duty, mortgage cost and mortgage administration fees.
A property might also have possible structural problems. Sellers are obliged to inform you of these, but it might be best to rather do an inspection yourself or call in a construction expert to do it, in order to avoid legal and financial problems later on.
Sarah Nicholson, commercial manager of the financial service provider Justmoney, says is it essential to familiarise yourself with the hidden costs of buying a home before you summarily sign on the dotted line.
“It is important to be aware that after having paid all the costs, the usual accounts accompany the keys to the home. Take all of these into account before you buy, so that you are not confronted by awful surprises at a later stage.”
Nicholson maintains that insurance should be at the top of this list, as it helps to protect your assets against contingencies. There are three kinds of insurance to protect your home, namely cover for home-owners, life insurance and short-term insurance.
You will also have to pay for water and lights, property tax and other municipal services or levies every month. A house also requires regular maintenance. “So be prepared to spend a few rand each month. Or try to put away money every month that you can use to maintain your home.”
If you are living in a sectional title unit, you will probably pay monthly levies for the maintenance and management of the communal property.
“The body corporate could institute a special levy over and above the monthly levy in order to fund an expensive project, such as installing a lift or painting the entire building. This could influence your finances considerably, especially if the project takes long to implement.”
Nicholson recommends that you request a copy of the newest audited financial statements before buying in a sectional title complex or a block of flats. “It will help you determine how efficiently the body corporate maintains the property, and if a special levy might be necessary.”
Law for all: https://www.lawforall.co.za/2018/12/hidden-costs-buying-house/