Be aware of all the additional costs over and above the purchase price/strong

When buying a property, there are a number of costs, which a buyer needs to be aware of, and budget for. These costs include; fees, commissions, duties, insurance, taxes and services. These costs will vary depending on the risk and credit rating of a buyer.

  • The Purchase Price is the agreed amount for the purchase of the property.  Example: Assumed Purchase Price = R 1 100 000
  •  A Deposit is not always required by the bank, but it depends on the value of the property and the credit rating of the buyer. The bank may offer a lower interest rate if a deposit is paid. If the buyers credit rating is poor, a larger deposit may be required. It’s a once-off, upfront payment to the Transferring Attorneys. Example: Deposit 10 % of R 1 100 000 = R 110 000 
  • Transfer Duty is the tax levied by the Government on the sale of all property, however, property transactions below R 1 000 000 (March 2020) are exempt. When buying property from a registered VAT vendor (developers as an example), Transfer Duty is not payable, as VAT is included in the price. Go to the SARS website for transfer duty rates based on property price categories. Example: Transfer Duty 3.0 % of R 100 000 = R 3 000 (3% of the amount exceeding R 1 000 000)
  • Transfer Cost is a once-off fee, paid to the Conveyancing or Transferring Attorney, for processing and registering the property in the new owner’s name, at the Deeds Office. This is a separate fee to the Transfer Duty. The amount payable is set out in the Tariff Guideline and varies depending on the value of the property.  Go to the home loan calculator to get an estimation of transfer costs. Example: Transfer Cost for R 1 100 000 = R 29 727
  • Bond Registration Costs is a once-off fee for the Bond Registration Attorney, to register the mortgage bond, on behalf of the bank. The bond is registered at the same time as the transfer of the property. These costs can include the Bond Initiation Fee and are based on the value of the bond. The buyer has to pay the Bond Attorney prior to registration of the bond. The bank may add the Bond Initiation Fee to the bonded amount. This increases the value of the bond and therefore the interest paid.  
  • Buyers should be aware of the services of a Bond Originator, as the bank pays the Bond Originator their commission and there is no cost to the buyer. They apply to all banks and negotiate a better interest rate. It’s advisable to speak to a Bond Originator before looking at properties, as they can pre-qualify you, so that you know what you can afford. Go to the home loan calculator to get an estimation of Bond Registration costs. Example: Bond Registration Cost for R 990 000 = R 29 950 based on an Interest Rate of 8.75 % over 20 years.
  • Homeowners Insurance (Building) This is protection of the bricks and mortar against damage due to fire, floods and so on. If the property is bonded, the bank will require that you take out Homeowners Insurance. Example: An indication of Homeowners Insurance for R 1 100 000 = R 220 per month, this is subject to many standard construction and roof, with no timber walls or thatch roofing.
  • Life Insurance may be required by the bank to ensure that the value of their security on your loan is protected. In the event of the death of the property owner or bond holder, the insurance will settle the outstanding bond amount so that your family is not lumbered with the debt you owe to the bank.  Example: There are too many variables to illustrate an amount.
  • Household Insurance (Contents) Although not obligatory, it’s highly recommended that you insure the contents of your home against loss or damage as a result of theft or burglary and other perils such as fire, flood and extreme weather conditions.  Example: An indication of Household Insurance for R 300 000 = R 220 per month, this is subject to many variables such as; security measures, main residence vs holiday home, an individual’s previous claims history, etc.
  • Rates and taxes are Municipal charges, which you will need to register for, once the transfer is completed. It is the revenue they require to provide basic services like; maintenance of roads, infrastructure, sewerage, etc. The amounts vary from municipality to municipality and is linked to the municipal value of the property. Example: The costs vary from municipality to municipality.
  • Services & Maintenance cost are the ongoing costs paid to the Local Authority, such as electricity, water and refuse removal. The Municipality will require a deposit. In addition, there are the costs of maintenance, repairs, garden and cleaning services, which all need to be budgeted for.  Example: The costs vary from municipality to municipality & the home.
  • Levies are applicable to sectional title properties, for the costs to administer the complex, building insurance and maintenance of the complex. Example: The costs vary depending on the complex


The cost that the seller is responsible for is:

  • Estate Agents Commission is the amount the Estate Agent charges for their service. This is usually a percentage of the Purchase Price, which varies, up to about 7.5 %, however, there is no regulation in South Africa. Properties are Lawyers selling property and they only charge 3 % Commission.  Example:  Estate Agents Commission 7.5 % of R 1 100 000 = R 82 500 Example: Properties Commission 3 % of R 1 100 000 = R 33 000


When purchasing a property, it is important to consider all costs; both upfront and ongoing, to ensure that the purchase is affordable and sustainable.


For further information on the costs associated with the purchase of a property, contact:


Estate Agent:

Tiaan van Eyk – Properties:

Tel.:  071 411 9622



Bond Originator:

Barbara Fisher-Hill – Mortgage Max

Tel.:  083 254 2283