The cost of buying a house in South Africa: 6 expenses to budget for

Finding a home at the right price is a good start. The next step is making sure your budget covers everything that comes with it, from the fees needed to complete the purchase to the monthly costs of living there.

A bond repayment calculator can help you estimate one part of the picture. But before you make an offer, it helps to answer two questions: how much cash will you need before you get the keys, and what will the home cost you once you move in?

Here are six expenses to work into your home-buying budget.

1. Your deposit and upfront cash

A deposit is the portion of the purchase price you pay yourself. It reduces the amount you need to borrow and may help you secure more favourable loan terms.

There is no single deposit requirement for every buyer. Your lender will assess your finances and the property before making an offer. Some buyers may qualify for a 100% home loan, while others will need to contribute a deposit.

For example, a 10% deposit on a R1.5 million home is R150,000, leaving R1.35 million to finance. That deposit forms part of the purchase price; it does not cover the other costs of the transaction.

Even if you qualify for a loan covering the full purchase price, check whether you will need cash for legal fees, moving and other expenses. Any additional cost financing depends on the lender’s approval and terms.

Before you make an offer: Confirm how much you can contribute without using all your emergency savings, and check when the deposit must be paid under the sale agreement.

2. Transfer duty and the costs of transferring ownership

Transfer duty and transfer fees are different expenses, although they are often grouped together in conversations about buying property.

Transfer duty is a tax paid to SARS on qualifying property acquisitions. Under the current rates, no transfer duty is payable on property valued at R1.21 million or less. Above that threshold, a sliding scale applies.

For a straightforward R1.5 million purchase where the purchase price is the applicable taxable value, transfer duty is R8,700: 3% of the R290,000 above the threshold.

Transfer fees cover the conveyancer’s work in transferring ownership into your name. The quotation may also include VAT on professional fees, Deeds Office charges and other disbursements. These expenses can still apply even when no transfer duty is payable.