South Africa is currently in the midst of a buyers' market, creating an opportunity for first-time buyers to purchase property. On top of that, banks are extending the threshold of 100% loans to qualified buyers, and in some cases even 105% loans to cover the transfer costs and registration fees.
Before you begin the home buying process, you need to see if you can actually afford it. This will require doing a thorough audit of your finances to see what you can comfortably afford to spend on a house. As a home buyer, you also need to be prepared for the additional costs of a property purchase, as well as the ongoing costs of home ownership.
When you buy a home, the additional transaction costs - sometimes called the "hidden" costs - include property valuation, bond initiation, bond registration, legal and transfer fees, as well as transfer duty if you are buying a pre-owned property. If you buy a newly-built home you will avoid having to pay any duty because VAT will be built into the purchase price.
The extra transaction fees can add up to quite a significant amount, on top of the purchase price of your new home, and you will usually have to pay them in cash to the attorneys handling the registration of your new bond and the transfer of the property into your name.
For example, on a home costing R1.5m the total additional transaction fees would be almost R85 000 on top of any cash you might need to pay a deposit.
Once you have calculated all your monthly expenses to see what disposable income you can put towards paying off a home loan, you then need to figure out the price range you should be shopping in. If you're making an offer as a first-time home buyer, you need to do your homework before negotiating with the seller. Look at the location and size of the property, the current economic and market conditions as well as the prices of similar properties in the area. All these must be factored in when putting in your offer.
If you are using an estate agent, the agent will serve as the "middleman" and will present your offer to the seller. If a final price is agreed upon, you will complete the formal offer to purchase. Once you and the seller have signed the document, you are both legally bound by it.
After your finance has been approved and you have paid all costs to the transferring attorney, the transfer process will begin.
It is currently a property buyers' market, but it is 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.
Insurance (including homeowner's, life and household contents cover) tops the list, because it will help protect you should something unfortunate such as theft, fire, or major damage affect your house. Furthermore, every month you would need to pay for your water and electricity, plus rates and refuse removal.
Owning a home also requires regular check-ups and repairs, while installing a good security system is likely to be a key priority to keep you and your possessions safe.
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.
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Eskom is now rationing electricity at stage 6. Experts have warned that South Africa will struggle with electricity provision for many more years given a myriad of problems at the utility, including shoddy maintenance.
For those too frustrated to deal with that kind of pain, off-grid home solutions won't come cheap – but they are no longer entirely beyond the reach of an upper-middle-class family either. Business Insider South Africa approached various renewable energy solutions companies to see how much it would cost to go off the grid. Prices vary depending on what your electricity usage is, but for a standard four-person family home you could expect to pay around R200,000 – without taking government rebates into account.
According to Paul Lombard from energy solutions company Regenergy, a fundamental challenge to renewable energy has been the upfront costs. But these days, most companies offer monthly instalment plans to allow users to pay off the investment over anything up to 15 or even 25 years.
“Many customers feel that the pride and peace of mind of solar ‘pays for itself’ as soon as the system powers on, and they can remotely monitor and adjust their system on their smart phone app,” said Lombard.
These are the key components to move your house over to solar energy:
As a rough guide, a 1 kilowatt (kW) solar array takes up about 8m2 of space on your roof. This can produce about 3-5 kilowatts hours of energy (kWh) per day depending on the angle and direction the panels face. Solar panels are typically installed facing north in South Africa, in order to maximise exposure to the sun’s rays.
You will need to replace today's panels every 25 to 40 years.
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Key to going off the grid is a battery storage unit. Newer battery types have been able to push the limits to improve storage for longer periods as well as stand up to more recharges before running out of steam, two of the major problems with home installations to date.
“Lithium batteries need replacing every 8 to 10 years, especially in hotter parts of our country. Typical solar deep cycle batteries like lead, calcium or other AGM [absorbed glass mat] batteries only provide 1,500 to 2,500 recharges. These ‘old school’ batteries require replacing every 3 to 5 years,” said Lombard.
Inverter and/or charge controller
Batteries produce output power in direct current (DC) form, which can run at very low voltages but cannot be used to run most modern household appliances. Utility companies and generators produce sine wave alternating current (AC) power, which is used by most commonly available appliances today. Inverters take the DC power supplied by a storage battery bank and convert it to AC power. You can expect your inverter and/or charge controller to have 10 to 15 years of operation.
Three companies give cost estimates, based on some typical home installations.
The three companies that gave us broad-stroke proposals give some idea of the range you can expect to pay to take a home off the grid right now: between R150,000 and R350,000.
Here's what each of the three companies quoted.
2 person home using 15kWh/day - R152,000
4 person home using 25kWh/day - R270,600
5 person home using +35kWh/day – R359, 790
10kW (29 - 46kWh) average 4 bedroom home - R215,000
15kW (75kW) 5+ bedroom - R240, 000
10kW 2-4 bedroom home - R249,669 (excluding Vat)
15kW 5 + bedroom home - R349,669 (excluding Vat)
If you feel that a full off-the-grid solution is too much, there are also other options. Björn Potgieter of SolarConnect, says they can provide a grid back up system using solar electricity for R120,000 or for R49,500 a basic back up that excludes powering stove, geysers, air conditioning.
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Why you shouldn't take the For Sale boards down over the summer holiday period.
Have you noticed how all the For Sale boards in the suburbs seem to disappear the minute that schools close for the December break? This generally doesn’t happen because everyone’s gone away, or because estate agents also feel like a holiday, but because home sellers have the impression that buyers don’t go property shopping in the festive season and that it is thus a waste of time to try to sell during this period.
However, this is really not true. In fact, the summer holidays are often particularly busy home-buying times – and not only in SA’s beautiful coastal towns and cities – because this is when those who have been transferred for work and those who want to move to live closer to certain schools and those who want to buy for any other reason are most likely to have the time off to find a new home
The reduced number of homes available for prospective buyers to view means there is less competition for their attention and actually increases the chance of achieving a sale if you keep your home on the market during the holidays.
Some other things to consider before you give your home a “rest” during the festivities are the following:
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