Purchasing a home is a big financial decision. The only way most South Africans can afford to buy a home is through a home loan. During this process, you’ll discover the impact and importance of a deposit, especially when it comes to home loan interest rates.
Most banks will provide you with 100% bond approval but in some cases, 10% deposit or more is likely required. So what happens when you’re not fully approved? You look at the deposit option.
A deposit helps improve affordability, especially with monthly instalments and it can help you save on the interest rate over a loan period.
But what if I can’t afford a deposit?
For those entering the property market, the amount required for the deposit is often scary but with a good budget and savings plan, it could help. Remember that saving isn’t a quick process. Consider the ballpark price of the home and then calculate your budget to determine how long and how much you’d need to save. Keep in mind other administrations costs like transfer duty, registrations fees, etc.
Is it possible to save in a short amount of time?
Yes, it is. Experts suggest you can save R100 000 over two years. You’ll need to aim for at least R4 200 per month. This is the part where you sit down and determine budget and savings plan that can help you spare this amount. Otherwise, consider the 10% option. If your desired property costs R650 000, a deposit of R65 000 would be required. If you’re looking to purchase the property next year, you’ll need to save around R5 500 per month. If you’re looking at two years, save around R2 700.
The home loan procedure doesn’t have to be a nightmare. Once you work out the necessary details like budget and savings, you could be on your way to purchasing your first property.
Want to find out more about purchasing your first property? Join us at our free property seminar and discover everything you need to know about the South African property market.