Your first home: the cash you need before the bond is even approved

Owning a home is one of the most meaningful money goals there is. It is also the one where people are most often caught off guard, not by the bond, but by the costs that arrive before and on transfer day.

The deposit

Some banks offer up to 100% finance to first-time buyers with a good credit record, while others ask for a deposit, especially on a second property. A deposit lowers your bond, your monthly repayment and the total interest you pay. Even when it is not required, it helps.

The upfront costs most people forget

• Transfer duty. A government tax on buying property, based on the price. Lower-priced homes may pay little or none, which matters a lot for first-time buyers.
• Stamp duty. Charged on the registration of the bond, based on the bond amount.
• Conveyancing (transfer) fees. The attorney who transfers the property into your name.
• Bond registration fees. The attorney who registers the bond for the bank.
• VAT on the attorneys' fees, plus smaller costs such as deeds office and bank initiation fees.

How much can you afford each month?

Banks typically look for your bond repayment to stay at or below roughly 30% of your gross income, and they will also look at your other debts. Just because a bank approves an amount does not mean it is comfortable. Remember rates, insurance, maintenance and municipal services come on top of the bond.

A first-home checklist

1. Check your credit record and clear small overdue accounts first.
2. Save for the upfront costs as well as the deposit.
3. Get pre-qualified so you know your real budget before you fall in love with a house.
4. Test your budget at a higher interest rate. If prime rose by 1%, could you still pay?
5. Keep an emergency fund after transfer. New homeowners always find something that needs fixing.

The best home is the one you can still afford in a hard year, not only in a good one.