Transfer and bond calculators
Buying a home is an overwhelming enough task without being hit by unforeseen costs. The best way of avoiding unpleasant and costly surprises is by carefully looking at your affordability and making use of convenient tools such as transfer cost calculators and bond calculators to simplify the process.
The various costs that should be considered, over and above the sale price of the property, are bond costs, bond instalments, transfer costs and commissions.
Bond Costs
Bond costs are applicable if there will be a mortgage bond over the property. This is commonly the case for property purchases because of the large financial investment required from the buyer. Bond costs, which are separate to the bond instalments or repayments, cover all work done and documents prepared in order for a bond registration to take place.
This includes fees payable to the bond attorney for their time and expertise, costs associated with generating and obtaining various essential documents, obtaining FICA compliance, performing Deeds Office searches, additional costs relating to postage, delivery and petties as well as VAT.
A bond calculator takes the mystery out of all these costs and calculates your total bond costs based on the value of the property and the loan amount required.
Bond Instalments
Regular monthly instalments must be paid to the financial institution who granted the bond in order to repay the full loan within the agreed period. These repayments include the value of the total loan split across the loan term, as well as the interest on the full loan.
The loan term and interest rate will be agreed upon between the buyer and the financial institution prior to entering into the agreement, and making use of a bond calculator to determine the value of monthly instalments can be incredibly useful in determining the loan value you might be able to afford.
Knowing your affordability also puts you in a good position to put together a strong bond application and be pre-qualified for a bond. This means that you will know the value of the loan you are likely to be approved for, subject to the loan agreement being accepted.
Transfer Costs
What are transfer fees? Transfer costs cover all fees and costs related to the property being transferred from the seller’s name to the buyer’s name.
These costs include transfer attorney fees, transfer duty (a tax payable to SARS on the transfer of immovable property) or VAT in the case where the seller is registered for VAT, costs related to obtaining FICA compliance, and Deeds Office fees including a levy and costs for any Deeds Office searches required. In addition, there may be additional costs for postage and petties as well as VAT.
A transfer cost calculator can help you calculate transfer duty which can be a significant cost, as well as all the additional fees relevant in the property sale process.
Commission
If an estate agent is involved in the property sale, a commission will be due to that agent, or agency. This commission will be based on the sale price of the property and the percentage commission charged may vary from agent to agent.
But what do all these costs really mean? In the below example, the various costs are put into a real-life scenario to illustrate how they impact the overall financial situation of the property purchase.
Note: to amend the calculations to match your personal criteria, you can make use of the Snymans Cost Calculators.
EXAMPLE
A property, valued at R2 000 000.00 (two million Rand) is sold. The various costs as outlined above would be as follows:
Transfer Costs
- Attorney Fees R25 380.00
- Transfer Duty R60 500.00
- Electronic Charges R920.00
- FICA Compliance R420.00
- Deeds Office Levy R1 146.00
- Deeds Office Search R405.00
- Postages & Petties R955.00
- VAT R4 212.00
Estimated Total – R93 938.00
Please note, costs are a guideline. Please make allowance for provisional rates and taxes, rates clearance certificates, levy clearance certificates and notarial deeds of cession of exclusive use areas in respect of sectional title transfers.
Bond Costs
Attorney Fees R25 380.00
Electronic Document Generation R920.00
FICA Compliance R420.00
Certificate Compliance R340.00
Deeds Copies & Delivery R180.00
Postage & Petties R955.00
Deeds Office Fees R1 146.00
Deeds Office Search R405.00
VAT R4 290.00
Estimated Total – R34 036.00
Please also make allowance for insurance fees.
Bond Instalments
Based on interest rate of 10.5% (prime lending rate) and a loan term of 20 years:
Total Payment R4 792,223.46
Total Interest 2 792,223.46
Monthly Repayments – R19 967.60
Commission
Based on an agent commission rate of 5%
Total Commission – R100 000.00
The above are examples. Use the Snymans Calculators to calculate the costs dependent on the value of your property.
Written by Wessel de Kock
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