Saving up the money for a deposit on a house can be difficult in today\u2019s economic climate, especially when you consider the transfer, attorney and bond fees that also have to come directly out of your pocket.<\/p>\n
That said, a sizeable deposit can make a world of difference to the long-term affordability of your home, so tightening your belt for a few months could be an extremely wise decision.<\/p>\n
\u201cHaving capital available for a deposit affects your home loan in several ways,\u201d said Tony Clarke, MD Rawson Property Group. \u201cFirstly, it shows the bank you are financially responsible, which lowers your risk profile. Secondly, it reduces the size of the bond you\u2019ll need, which also decreases risk from the bank\u2019s perspective. Thirdly, with a low risk profile you\u2019ll have a better chance of securing finance at a favourable interest rate, which, in combination with the reduced loan amount, can drop the total interest you\u2019ll pay over the life of your bond by hundreds of thousands of rand.\u201d<\/p>\n
Read: You can rent-to-own property in South Africa \u2013 this is how it works<\/a><\/strong><\/p>\n In addition to the financial benefits, a deposit can also go a long way towards strengthening your offer to purchase, as sellers and estate agents see deposits as good indications of a buyer\u2019s ability to secure a loan.<\/p>\n \u201cThe actual amount of the deposit varies from sale to sale,\u201d said Clarke, \u201cand can be negotiated with the seller based on your financial outlook. At present, deposits are averaging at just over 9%, but were around 16% a year ago, so you can\u2019t always take the standard 10% rule as a given.\u201d<\/p>\n So how, exactly, does one save up anything from 9% to 16% of a home\u2019s value? The answer is little by little, and step by step. Here are just a few ways to start the ball rolling.<\/p>\n Those five tips alone could save you as much as R6,100 a month, which would give you a 10% deposit on a R1 million home in just over a year.<\/p>\n \u201cSaving up isn\u2019t a quick process, but it often shows us just how much money we waste on unnecessary things,\u201d said Clarke. \u201cA lot of people choose to continue their frugal habits after buying their home, and end up paying their bond off much faster than expected.\u201d<\/p>\n Raising your rent: how much is too much?<\/a><\/strong><\/p>\n I can\u2019t pay my rent \u2013 what do I do now?<\/a><\/strong><\/p>\n\n
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