What to budget for when buying a home

For many first-time buyers, the journey into property ownership begins with excitement… and a single calculation: Can I afford the bond repayment?

According to Herman Coetzee, that question is only the starting point.

Speaking about the realities of buying property in South Africa, Coetzee explains that misunderstandings around pricing are one of the biggest causes of financial stress for new homeowners.

“One of the biggest misconceptions among first-time buyers is this: ‘If I can afford the bond repayment, I can afford the house.’”

He explains that the purchase price is only one component of the total financial commitment. The real pressure often comes from costs buyers only discover once they are already emotionally invested.

The Costs Buyers Don’t See Coming

Coetzee says that while deposits are no longer always mandatory, they remain financially strategic.

“Traditionally, banks required deposits, but today many first-time buyers qualify for 100% home loans.”

However, he cautions that qualifying for a full loan does not mean it is the best financial decision. 

A deposit improves approval chances, reduces monthly repayments and lowers total interest paid over time. Even when buyers qualify for zero-deposit financing, having savings strengthens their negotiating position and creates a financial buffer.

The largest upfront expense, however, is usually transfer costs. These are legal fees paid to transferring attorneys to move ownership from the seller to the buyer. They include conveyancing fees, Deeds Office charges, administrative fees and VAT.

Importantly, Coetzee stresses that these costs are separate from the bank.

“Transfer costs are NOT paid to the bank, they are paid to the transferring attorneys.”

As a broad guideline, buyers can expect to pay between 5% and 8% of the purchase price in transfer costs, depending on the property value.

Another area of confusion is transfer duty. The tax payable to the South African Revenue Service (SARS). Not all properties attract this tax. Below certain thresholds, no transfer duty is payable. Above those thresholds, a sliding scale applies. Many buyers assume this tax applies automatically, when in fact it depends entirely on the purchase price.

For buyers taking out a home loan, bond registration costs must also be budgeted for. These fees cover the legal process of registering the bond in favour of the bank and are separate from transfer costs.

“You pay transfer costs AND bond costs - they are separate.”

Depending on the size of the bond, registration costs can range from roughly R25,000 to R60,000 or more.

Banks may also charge initiation fees and valuation fees. While some lenders allow these to be added to the loan, doing so increases the total interest paid over the life of the bond.

Insurance is another non-negotiable component. Before a bond can be registered, homeowners' insurance is compulsory. This covers structural risks such as fire, flood and storm damage. Household contents insurance, though optional, is strongly recommended.

Municipal deposits are also required when ownership transfers. In areas governed by the City of Johannesburg Metropolitan Municipality, for example, buyers must typically pay deposits for water, electricity, refuse and sewerage. These costs vary depending on the property and usage.

Then come the often-underestimated moving and setup expenses, from hiring a moving company to changing locks and handling minor repairs.

“Almost every new homeowner spends money within the first 60 days.”

The Monthly Reality of Homeownership

Beyond the once-off costs, Coetzee emphasises that buyers must think carefully about sustainability.

Owning a home replaces rent with several financial responsibilities: bond repayments, municipal rates and taxes, utilities, insurance premiums and, in sectional title schemes or estates, levies. Levies typically cover security, maintenance of common areas and building insurance.

Maintenance must also be factored in. A practical rule of thumb is to budget approximately 1% of the property value per year for maintenance.

Before purchasing, Coetzee advises buyers to request the latest municipal statement and, if applicable, the levy statement. These documents provide clarity on the true monthly commitment beyond the bond instalment.

A Practical Example

On a R1,200,000 property, transfer costs range from R60,000 to R90,000, with bond registration costs adding another R35,000 to R55,000. When municipal deposits and moving expenses are included, upfront costs could reasonably total between R110,000 and R180,000 before the first bond repayment is made.

This is why preparation matters.

Managing Risk, Not Just Emotion

When asked how buyers can safeguard themselves, Coetzee returns to a core principle.

“Property success is not about finding the perfect house, it’s about managing risk.”

He advises first-time buyers to start with financial discipline rather than emotion. Getting pre-qualified before viewing properties allows buyers to shop within realistic parameters. Keeping total housing costs within a sustainable percentage of income helps protect against interest rate increases and financial shocks.

“Banks approve loans. You must live with them.”

Coetzee also warns buyers to verify everyone involved in the transaction. Estate agents should be properly registered and hold valid Fidelity Fund Certificates. Buyers should confirm the seller’s ownership through title deed verification and avoid transferring deposits into personal accounts. No documents should ever be signed without full understanding.

At Fio Real Estate, these safeguards form part of the company’s client-first approach to property transactions.

The Bottom Line

For Coetzee, buying property remains one of the most powerful wealth-building decisions South Africans can make.

Understanding how pricing works means understanding every cost attached to ownership, not just the bond repayment.

A well-prepared buyer, he concludes, becomes a confident homeowner.