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Buying a new house in South Africa or just looking
for a better home loan or
mortgage rate.
What You Need to Know
South Africa’s leading banks are ABSA, FNB, Nedbank and Standard Bank. Let’s have a look at an idea of what your repayments would be on a loan with 11% and 11.5% interest rate. Just so we will have a better idea of the effect the interest rate has on your repayment amount.
| Loan | Repay 11% | Repay 11.5% |
| R 200,000 | R 2,064 | R 2,133 |
| R 400,000 | R 4,129 | R 4,266 |
| R 750,000 | R 7,741 | R 7,998 |
| R 1,000,000 | R 10,322 | R 10,664 |
| R 1,250,000 | R 12,902 | R 13,330 |
| R 2,000,000 | R 20,644 | R 21,329 |
Now let’s have a look at the transfer costs involved in buying a house. Transfer duty is the tax that the Government levies on any property. In the event of buying vacant land, you will have to pay transfer duty on the land only, but when buying an existing house, the transfer duty is based on the value of the building and the land. Here is a scale on which individuals are being charged:
For individuals, transfer duty is calculated at R25000.00 on the purchase price above R500 000 to 1 Million Rand and for Properties above 1 Million it is calculated at R 25000 plus 8% for every Rand above 1 Million. For legal entities, transfer is calculated at 10% of the total purchase price of the property.
Some transfers attract no transfer duty:
1. Properties where VAT is applicable
2. Properties, including improvements, purchased for less than R500 000 by a natural person as defined in the tax laws.
If the property is being bought through a company, corporation or trust, the transfer duty will be worked out on a percentage basis (10%). If the seller is a company with a VAT registration, you will pay the VAT amount and not the transfer duty amount.
The deposit that you need to pay upon buying a house can be showered into an interest bearing account, held by the Estate Agent or the Conveyancer (whoever is appointed to keep this money). The interest received on the deposit amount will then be paid back to the buyer upon registration of transfer, unless otherwise agreed.
When buying property, a written deed of sale must be signed by the seller and the buyer, as well as their spouses if married in community of property. Any verbal agreements will not be accepted and are invalid. Any and all verbal promises made, should be stated in this deed of sale.
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