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The Dream of Home Ownership
Owning property is a major milestone in South African culture. It represents stability, a place to raise a family, and an asset to pass down to the next generation. But the transition from tenant to homeowner is filled with financial landmines. Many first-time buyers focus solely on the monthly bond repayment, forgetting the army of hidden costs that come with the purchase.
Step 1: The Pre-Qualification
Before you fall in love with a house on Property24, you need to know what you can afford. A bond originator (like BetterBond or ooba) can do a pre-qualification for you for free. They check your credit score and income expenses to give you a realistic “shopping budget.” This certificate also makes estate agents take you seriously.
The Hidden Costs of Buying
If you buy a house for R1 million, you need more than R1 million. You need cash on hand for:
- Transfer Duties: This is a tax paid to SARS. Good news: properties under R1.1 million are currently exempt from Transfer Duty.
- Transfer Fees: Paid to the conveyancing attorney to transfer the Title Deed into your name.
- Bond Registration Fees: Paid to the bond attorney to register the bond with the Deeds Office.
For a R1.5 million house, these fees can easily total R80,000 to R100,000. This must be paid in cash before the transfer happens. Banks rarely finance these costs.
Understanding FLISP (First Home Finance)
If you earn between R3,501 and R22,000 per month, you might qualify for a government subsidy called FLISP (Finance Linked Individual Subsidy Programme), now often called “First Home Finance.”
How it works: The government gives you a once-off subsidy (ranging from roughly R30,000 to R130,000 depending on income) to help you buy your first home.
Usage: You can use this money to pay your deposit or to reduce your loan amount. It is a massive help that many eligible South Africans simply don’t know about.
The Interest Rate Gamble
Banks will offer you an interest rate based on your risk profile. Prime plus 1% or Prime minus 1% makes a huge difference over 20 years.
Shop Around: Never just accept the quote from your own bank. Use a bond originator to apply to all major banks (Standard Bank, FNB, Absa, Nedbank, SA Home Loans) simultaneously. Let them compete for your business. A 0.5% difference in interest rate can save you hundreds of thousands of Rands over the life of the bond.
Sectional Title vs. Freehold
Sectional Title (Complexes/Flats): You own the inside of your unit, but the exterior and common areas are owned by the Body Corporate.
Pros: Security, shared maintenance costs.
Cons: Levies. You must pay a monthly levy. Special Levies can also be raised for major repairs. You must follow strict conduct rules.
Freehold (Stand-alone house): You own the land and the building.
Pros: Freedom to renovate, no levies.
Cons: You are responsible for everything—security, garden, roof leaks, and painting.
Conclusion
Buying a home is a long-term commitment. Don’t rush. Save for a deposit (even 10% helps lower your interest rate), clear your credit record, and budget for the ongoing costs of rates, taxes, and maintenance. Home ownership is rewarding, but only if you buy smart.
