Worth waiting to save deposit
Home buyers may complain about having to save up deposits of 10% or even 20%, but they’ll probably be glad they did after next year when interest rates and home loan repayments may increase.
“The strong rand is helping to keep inflation and interest rates down at the moment,” says Harcourts Africa CEO Richard Gray, “but this situation could change within a few months and then those who kept their bond repayments down by paying a deposit will be pleased they did.”
In addition, he says, home buyers need to consider that the costs of running a home are rising all the time, with electricity charges, for example, set for another hike next year.
“Saving for a deposit rather than financing 100% of your home purchase could be a budget life-saver in future.”
Ideally, he says, home buyers should try to have a full 20% of the home’s price as a deposit.
“With the national average home price now above R800 000 this is obviously a lot of money. However, when the determination to save wavers buyers should bear in mind the likely benefits, especially that they will be putting themselves in a strong position to negotiate a below-prime interest rate, because lenders will consider such buyers to present a lower risk factor. At the same time, lenders have found that home buyers that put down a full 20% are much less likely to default on their loans.
“A lower interest rate on your loan would make your monthly repayments more affordable and also add up to great savings over the course of the loan,” he says.