Four in ten first-time buyers have a deposit. Do you?
Category General News
Remember those days as a kid, clinking coins into your piggy bank, dreaming of what you'd buy with all that treasure? Well, it's time to channel that same excitement and determination towards a much bigger goal: saving for a home loan deposit. According to Standard Bank, four in ten first-time buyers had a deposit, and the average deposit was a whopping 24% of the selling price. That might seem daunting, but with a bit of planning and discipline, you can make it happen too. Here's a roundup of the benefits of saving towards a deposit and ways to get the ball rolling.
Why do you need a home loan deposit?
Homebuyers are facing a tough economic climate and the country's lenders are easing pressure on homebuyers by offering attractive discounts. Banks are making finance more accessible by easing terms and conditions and offering better rate discounts. While you may find it easier to qualify for a 100-105% bond, it's no guarantee. Here are reasons it still helps to save up for a deposit:
Qualify for a loan easily: With a deposit, your home loan size will be smaller and this makes you less of a risk for lenders. In this way, you'll find it easier to get access to financing.
Access more home options: That deposit in hand could put you in a house price bracket that you may not have otherwise been able to afford on just your current salary.
Enjoy lower interest rates: Lenders often offer more favourable interest rates to borrowers with larger down payments. To lenders, a deposit shows you have good spending habits and a commitment to managing your finances carefully. This means you could save money on your monthly mortgage payments over the life of the loan.
Make smaller monthly payments: A larger down payment reduces the overall loan amount, leading to smaller monthly instalments. This can free up more of your income for other expenses.
Have a shorter loan term: With a larger down payment, you may be able to qualify for a shorter loan term. This means you'll pay off your mortgage faster and save on interest.
Increase your equity: A larger down payment gives you more equity in your home from the start. This can be beneficial if you need to sell your home in the future or want to refinance.
By prioritising that home loan deposit, you'll be taking a great step towards homeownership. Plus, there are plenty of strategies you can use that can help you ensure your success.
How to get a deposit for a house quickly
While Mbombela (Nelspruit) has plenty of affordable property options, first-time buyers who jump into the market will reap the rewards. According to ooba's statistics for Q1 2024, year-on-year Mpumalanga registered the highest growth in the price of houses originated by ooba Home Loans, showing a robust +9.4% and +9.5% respectively. Putting together a deposit and getting on the property search is a must to take advantage of current property pricing.
Set a savings goal: Determine how much you need to save for your down payment and set a realistic timeline and manageable steps to achieve it.
Create a budget: Track your income and expenses to identify areas where you can cut back. This will help you increase your savings.
Avoid creating 'bad' debt: Try to pay off high-interest debt, such as credit card balances, to free up more of your income for savings.
Cut unnecessary expenses: Review your expenses and identify areas where you can reduce spending, such as dining out less and cancelling unused memberships or subscriptions. You can also switch to cheaper alternatives for everyday items and services. Apps like Budget Planner, Receipt Scanner, and Bluecoins can also help you track your spending and make good financial decisions.
Open a high-yield savings account: These accounts offer higher interest rates than traditional savings accounts, allowing your money to grow faster.
Automate your savings: Set up automatic transfers from your checking account to your savings account to make saving a habit. The savings account you use should also take at least 24 hours to make withdrawals which will stop you from making impulse purchases.
Look for ways to earn extra income: If you can't negotiate a higher salary, consider taking on a side hustle or freelancing to supplement your income and boost your savings. You can also sell unwanted items on sites like Facebook Marketplace, Gumtree, or Locanto to make some extra cash.
Embrace loyalty cards: When shopping for groceries, clothing, petrol, or dining out, use these to get deals and cashback that can help save on your monthly expenses.
Become a bargain hunter: By scouring brochures and prices online, you can compare prices and make the best decision possible for your bank balance. Price comparison websites like PriceCheck can help you achieve massive savings that can be channelled towards your deposit.
Make that deposit count
Once you've saved up for your home loan deposit, Kellaprince Properties is ready to assist you every step of the way. Our team of preferred bond originators includes:
- BetterBond
- Bond Gallery
- Elcasa
- GetGo Home Loans
- Mortgage Max
- MultiNET Home Loans
- ooba
Any one of the abovementioned bond originators can help you get prequalified and apply for a loan. With their expertise, we'll ensure you secure the best possible mortgage deal. Contact us today to start your journey towards homeownership.
Author: Kellaprince Properties