Phase Three of buying a home in South Africa

So, we received a deal from Standard Bank , which sounded quiet affordable. Now, as exciting as this all is, there are a few things you need to be prepared for (Things that I was NOT prepared for, HOWEVER, my husband proved to be quiet the hero).Before any of the proceedings can commence, money needs to be paid. Now, lawyers are amazing people, I mean, they handle all the legal mumbo jumbo while you don’t have to, HOWEVER, they come at a HUGE price. The money for lawyer’s fees comes out of your own pocket and needs to be paid upfront in order for the lawyer’s to begin their work.

If you have to pay a deposit, this is also payable at this stage. Another unexpected cost that pops up at this stage is bond cover and structural insurance. This HAS to be taken and ups your monthly payment to about a rough R1000 extra. You have to provide proof to the bank that you have actually taken the cover and insurance BEFORE they finalize the home loan for you.

You will sign a bunch of papers, explaining to you how much you will be paying and over how many years. Bank standard is 20 years and the current prime lending rate is 10%. You can extend your repayment term and there is no surety that you will get the prime interest rate. The bank decides on the interest rate and it is NOT fixed (meaning it can go higher or lower with time and yes, this does affect your monthly repayment amount).

We used the same attorney as the seller of the house and therefore got a 50% discount on the lawyers fees. You should inquire about this when deciding on a transfer attorney.

Upfront Payment Example:

Property Price: R750 000
Loan Amount: 95% of property price (R712 500)

Lawyers Fee: R40 000
Deposit: R37 500

UPFRONT PAYMENT: R77 500

Monthly Payment Example:

Loan Amount: R712 500
Interest rate: 10.4%
Bond cover: R395
Structural Insurance: R600
Monthly Repayment: R7 066 (Use the Ooba calculator)

Total Monthly Repayment: R8 061

Pest Control and Electricity checks need to be conducted on the property to ensure that there are no pests (wood borers) and that the building’s electrical is compliant. The lawyer will call you over to sign the papers to purchase your home and round up all the documents including pest control and certificate of compliance. After all the necessary documents are rounded up, the lawyer will then proceed to submit your application to the bank for final approval. Once the bank approves, the lawyer will then submit the application to the deeds office, which follows it’s own process over there. Yes, here you wait again…

xoxo,
The Opinionated Wife

 

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