Buying Your First Property In South Africa
1.
Preparing to Buy a House
Check your finances: Review your income, expenses, and savings.
Set a budget: Use the 30% rule – your bond repayment should not exceed 30% of your gross monthly income.
Save for upfront costs: You will need money for a deposit (often 10–20% of the purchase price) and extra costs such as transfer fees, bond registration, legal fees, and moving expenses.
Check your credit record: A good credit score improves your chances of getting a home loan. You can get one free credit report per year from bureaus like TransUnion or Experian.
Get pre-qualification: Banks or bond originators can assess how much you may qualify for before you start house-hunting.
2.
Finding the Right Property
Decide on location based on:
Safety and crime levels.
Distance to work, schools, transport, and shops.
Future property value growth in the area.
Consider the type of property: free-standing house, townhouse, apartment, or complex unit.
View multiple houses to compare value.
Inspect carefully:
Look for damp, leaks, cracks, faulty wiring, and plumbing.
Check security features like fencing, gates, and alarms.
Confirm levies and municipal rates (especially in complexes or estates).
3.
Making an Offer to Purchase (OTP)
Once you find the house you want, you sign an Offer to Purchase.
The OTP is a legally binding contract between you and the seller.
It must include:
Purchase price.
Deposit amount (if required).
Conditions (such as subject to bond approval).
Occupation date and occupational rent (if applicable).
Who pays which costs (usually the buyer pays transfer and bond costs).
Always read carefully before signing. If unsure, ask a lawyer or property professional to explain.
4.
Applying for a Home Loan (Bond)
Submit your OTP to your bank or use a bond originator to apply to multiple banks.
Documents required:
South African ID.
Proof of income (payslips or bank statements).
Proof of residence.
Copy of the signed OTP.
Banks will assess your affordability and credit history.
If approved, you receive a loan offer stating interest rate, repayment terms, and conditions.
Compare offers from different banks before accepting.
5.
Legal and Transfer Process
A conveyancing attorney handles the transfer of the property into your name.
There are three attorneys usually involved:
Transfer attorney (appointed by the seller).
Bond attorney (appointed by the bank).
Cancellation attorney (if the seller still has a bond to settle).
As the buyer, you pay the transfer attorney fees and costs.
Transfer Costs Include:
Transfer duty: A government tax (exempt if the property is under R1.1 million as of 2025).
Attorney fees: For registering the transfer.
Bond registration fees: Paid to the attorney registering your bond.
Deeds office fees: To record the property in your name.
6.
Moving In and Ownership
Once all payments are made, and the Deeds Office registers the property, you officially become the owner.
You will receive a title deed in your name.
Arrange insurance:
Homeowners insurance (required by banks if you have a bond).
Household contents insurance (to cover belongings).
Budget for ongoing costs such as municipal rates, water, electricity, levies, and maintenance.
7.
Rights and Responsibilities of a Homeowner
Rights:
Full ownership of the property after registration.
The right to renovate or improve (within municipal rules).
Protection from unlawful occupation of your property.
Responsibilities:
Pay your bond, rates, taxes, and levies on time.
Maintain the property to preserve its value.
Follow community or sectional title rules (if living in a complex).
Ensure safety and compliance with municipal by-laws.
8.
Tips for First-Time Buyers
Use a bond originator to get the best loan deal at no extra cost.
Ask about the First Home Finance subsidy (previously FLISP) if you are a first-time buyer earning between R3,501 and R22,000 per month. This can help with your deposit or costs.
Always budget for hidden costs (moving, repairs, security upgrades).
Never rush into signing an OTP without understanding the conditions.
Keep emergency savings aside for unexpected home expenses.