Be Aware Of Hidden Costs When Buying Property

beware of hidden costs when buying property

It’s currently a property buyers’ market – but it’s essential to do your homework first so that buying your dream home doesn’t turn into a financial nightmare.

The stagnant economy, slightly lower prime lending rate, and increased number of properties for sale in numerous locations are encouraging some potential buyers – who might have been sitting on the fence – to seriously explore the market.

“Before signing on the dotted line, however, it’s important to inform yourself about the hidden expenses that come with buying a property,” advises Justmoney Commercial Manager, Sarah Nicholson.

“Be aware that after you’ve paid your deposit and closing costs, there are other, regular bills that arrive along with the house keys. Take all these into account before your purchase, so that you can settle into your new nest without nasty surprises.”

Insurance tops the list, because it will help protect you should something unfortunate such as theft, fire, or major damage affect your house. There are three kinds of insurance to protect your home:

·         Homeowner’s cover: Your mortgage lender requires you to hold a homeowner’s comprehensive policy, which covers the structure of your house. If you have a sectional title, this protection will be covered by the body corporate and you won’t need your own policy.

·         Life cover: Depending on your bond agreement, this is required or recommended to protect your investment for your family in the event of your death.

·         Household contents: While not generally required by the bank, it’s highly recommended that you insure the contents of your home and any particularly valuable items.

“The premiums for these covers will depend on your profile, so it’s best to shop around and read the fine print to compare the costs and exactly what they cover,” says Nicholson.

Municipal rates, taxes,

Every month you will need to pay for your water and electricity, plus rates and refuse removal. “Ask the current owners for copies of their monthly bills to get an idea of which costs are incurred,” advises Nicholson. She recommends installing a prepaid meter to improve control of your electricity spending.

Maintenance matters

Owning a home requires regular check-ups and repairs before small nuisances, such as leaks or cracks, turn into major headaches. “Be prepared to spend a bit each month, or save a sum each month towards keeping your home up to standard and in good working order. You may also decide to invest in some upgrades.”

Installing a good security system is likely to be a key priority to keep you and your possessions safe. Costs can be factored against lower insurance premiums.

Monthly and special levies

If you’re living in a sectional title estate, you may also be required to pay monthly levies for the upkeep and management of the communal property. The body corporate could implement a special levy over and above this for an expensive project such as installing a lift or repainting the entire building. This could impact on your finances considerably if the project takes a long time to implement.

“Ask for a copy of the latest audited financials before you buy into a sectional title complex or apartment block,” says Sarah. “This will help you to determine how efficiently the body corporate is maintaining the property, and whether a special levy may be required.”