Prepare well for the hidden costs of owning your own home

Buying a home is a significant investment, so make sure to prepare for the unexpected or hidden costs that come with home ownership. If you’re buying a home with a bond, the first step is working out how much you can afford to pay each month on your bond instalments. An online calculator will give a good indication of what you can afford factoring in the current prime lending rate.

Put a deposit down if you can

It’s advisable to put down a deposit of at least 10%, if possible. Being able to offer some form of deposit will have an impact on the gross household income required to qualify for a bond. A deposit will also make a significant difference when it comes to banks deciding whether to approve or decline a bond application.

Once you’ve found your dream home and the offer to purchase has been accepted and signed, you need to prepare for these extra expenses:

You will also have variable costs because you need to pay for FICA fees, electronic instruction fees and courier costs for documents relating to the sale. BetterBond has a Bond and Transfer Cost calculator that will help you budget for these additional costs.

Municipal rates and taxes

As the owner of the property, you’ll be responsible for municipal rates and taxes, such as water, electricity, and even fibre. You should also budget monthly for any repairs or maintenance that need to be done. If you are in a sectional title property, there will be a levy for services, which covers costs such as building insurance, security, water and sewage collection.

Cancellation penalty fees

If you are selling your home, remember that you’ll have to pay early cancellation penalty fees if you don’t give your bank three months’ notice if you cancel your bond. Also, as the seller, be sure to get compliance certificates for electrical, gas, the electric fence, water or plumbing and beetle. If anything needs to be repaired to get these certificates, you’ll need to carry the cost.

A bond originator won’t cost a cent

Working with a bond originator is one aspect of buying a home that won’t cost you anything. BetterBond applies to multiple banks, on your behalf, to secure the most competitive interest rate on your home loan. The bank pays the bond originator a once-off fee when the home loan is registered. However, this cost is not passed on to you and need not form part of your homebuying budget.

Structural insurance

Once your bond is approved, you’ll need to prove that you have home insurance before the registration of the property can take place. The cost of your cover is not linked to the market value of your home, but to its replacement value.

Remember to also set aside some budget for moving expenses. A good tip is to try and move in the middle of the month, because it is cheaper than moving at month-end.

Move-in budget

While you may want to live in your new space for a few months to get a feel for it before deciding if and how you’d like to redecorate, set aside some money in your move-in budget for items such as light bulbs, sink plugs and a new set of house keys or door locks. Although miscellaneous, they’re necessary, and can quickly add up to a hefty amount.

Despite the costs associated with buying a home, being able to own a property is an invaluable investment that will offer a considerable return on your investment in the long term.