What other costs are there associated with Mortgages?

An important factor to take into consideration when doing your calculations is the other costs of purchasing a property. It's not just a case of finding the deposit and knowing how much your mortgage payments will be each month. The moment you've found the home of your dreams and have had your offer accepted, you'll find that there are other expenses that crop up along the way. The main additional expenses are transfer fees, conveyancing fees, bond registration fees, valuation fees and initiation fees. We have detailed each of these below:

Transfer fees

Transfer fees are fees payable to the South African Revenue Service (SARS) whenever you buy a house valued at over R500,000. Yes, it's a tax you pay for the privilege of buying your own home! It is calculated as a percentage of the purchase price and varies depending on the purchaser's legal status. If you are buying in the name of a company or trust the fee is 8% of the purchase price. For an individual person the calculation is as follows :

For a purchase price of R0 - R500 000.00, the duty is 0% For a purchase of R500 0001.00 - R1 000 000.00, the duty is 5% on the value above R1000 000.00 For a purchase price of R1 000 0001.00 and above, the duty is R25 000.00 + 8% on the value above R1 000 000.00 The transfer duty is paid by the purchaser of the property prior to registration of transfer, or within six months after signing the agreement. There is a penalty fee for late payment of 10% per annum for each completed month after due date is levied.

Bond registration (attorney) costs

The attorney registering your bond charges fees. They receive an instruction from the bank that has approved your home loan, draw up the paperwork, do FICA checks and lodge at the Deeds office. These attorneys should be in touch with you within a week of your mortgage being approved. They will ask you to come into their offices to sign the necessary documents. The fees are charged on a sliding scale, and your mortgage consultant will be able to inform you how much these will be exactly but for easy reference there is a table below.

Bond Amount Attorney Fee Post & Petties VAT Deeds Office FICA fee Total
R 500,000 4000 350 560 340 250 R 5,500
R 990,000 7000 350 980 400 250 R 8,980
R 1,500,000 8500 350 1190 500 250 R 10,790
R 2,000,000 10000 350 1400 500 250 R 12,500

Please note that Bond Busters arrange all of its clients a 40% discount with their bond registration fees. We do this by using collective negotiation with certain selected bond registration attorneys.

Conveyancing (attorney) costs

The conveyancing attorney is appointed by the seller, but paid for by the buyer – unfair but the way it is! Again these fees are on a sliding scale that your mortgage consultant can give you, but here is a brief outline.

Bond Amount Conveyancing Fee Post & Petties VAT Deeds Office TOTAL
R 500,00 6000 550 917 340 R 7,807
R 990,000 10000 550 1477 400 R 12,427
R 1,500,00 12000 550 1757 500 R 14,807
R 2,000,000 14000 550 2037 500 R 17,087

Bank's valuation fees

After the introduction of the National Credit Act the banks no longer charge a valuation fee but have included it in their increased their ‘initiation fee’ below.

Bank’s initiation fees

Under the National Credit Act banks are allowed to charge up to R5,700 for their initiation fees. These vary from lender to lender but expect to pay at least R3,500 and no more than R5,700.

Mortgage broker’s fees

Unlike new bond origination, we are not paid commission by certain lenders when consolidating your debt in terms of remortgaging. We are unfortunately then forced to charge a fee for the service provided when placing business with these lenders. We try to keep the fees to a minimum but due to legal and administration costs as well as skilled staff, the fees need to be recovered. These fees are reviewed from time to time and are charged at the end of the registration process meaning that you will never be required to pay the fees up-front out of your own back-pocket. The fee is currently set at a minimum of R5000.00 plus Vat or 1% plus Vat of the total requested whichever is the greater. This service fee is taken at the end of the registration process and will be deducted from the amount owing to you by the registering attorneys. The registering attorneys will then pay the fee over to us.

Our service of trying to consolidate your debt resulting ultimately in a better combined interest rate than individual rates, is still a free service. Should you for some reason decide not to take up the mortgage offer then there will be no fee payable confirming our ethical stance that we only win if you win i.e. we only get paid if you get the benefit. A consultant will explain the fees as well as the saving to you in more detail once all documentation is received and agreement is reached by the lenders.