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5 Essential Bond Transfer Costs to Always Prepare For.

Oct 15, 2024 | Property

It isn’t something that you realise is going to be such a significant part of your home ownership journey, but the bond transfer step is a major milestone with serious financial implications. Whether you are moving to a new home or refinancing your existing property, it is absolutely essential that you understand the various costs involved to avoid any unexpected financial burdens.  

In South Africa, bond transfer costs can vary widely depending on factors, from the property’s value and type of bond to the specific fees charged by banks and attorneys. However, by being informed of these expenses, you can better prepare yourself for the financial implications of transferring your bond and ensure a smoother transition. 

Before we dive into what you can expect to pay when transferring your bond, make sure that you check out our step-by-step guide that details the process of transferring a property from the seller’s name to the buyer’s name.  

The Attorney Fees 

One of the significant costs involved in a bond transferral is the attorney or conveyancing fees. When a bond is transferred, the process is conducted by a conveyancing attorney, who is appointed by the bank. These attorneys handle the registration of the bond in the buyer’s name, and it is the buyer who pays these costs and not the seller or the buyer. 

These fees are typically determined by a standard tariff based on the value of the property. An example that helps unpack this cost is to think of a bond that is valued at R1 million. In this case, you could incur legal fees of between R18,000 and R20,000, as well as the VAT, which is charged on top of the attorney fees. 

Bond Transfer Duties

In simple terms, the transfer duty is a tax levied by SARS on property transactions. It is different to bond transfer costs, which are the fees paid to the conveyancing attorney (plus VAT).  

Some good news is that properties worth less than R1 100 000 are exempt from this tax. For properties worth more, the actual amount payable depends on the value of the property and is calculated on a sliding scale, starting at 3% and going up to 11%. 

Bond Registration Costs 

The bond registration process involves fees payable to the Deeds Office for registering the bond in the buyer’s name. These costs vary based on the bond amount, but generally, these costs range between R1,300 and R6,000. 

Rates And Taxes Clearance 

Another cost that you need to budget for is the clearance certificate. Before a bond can be transferred, the seller must obtain a rates and taxes clearance certificate from the local municipality. This certificate ensures that all outstanding rates and taxes are paid up to date and the cost varies by municipality, ranging from between R500 and R2,000. 

The Insurance Factor 

It’s easy to forget about this cost, but in light of the fact that most banks require bondholders to have insurance, it’s a necessary fee to include here. Most of the time, the type of insurance required is buildings insurance, also known as homeowners’ insurance, however some may also make it part of the bond agreement that bond protection insurance be taken out, too.  

Yes, these premiums are an added cost, but the cover provides peace of mind and financial support in the case of accidents, thefts, and other damaging incidents. 

Feeling Informed? 

Transferring a bond can be a complex and expensive process. All of these costs add up, making it vital that you get advice from a qualified conveyancer or attorney who can guide you through the process. This information will help you budget and plan properly in order to ensure a smoother, less stressful transition. 

Our parting advice is for you to choose experienced conveyancers you can trust, to keep communication open with your lender, and start budgeting for your bond transfer costs.  

Don’t forget that AA Inform offers a variety of property tools and resources, including our home affordability calculator and free property valuation reports. Tools like these can help you to assess your home’s worth accurately and get true insights into properties of interest to you.  closer look at these tools.

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