SAVE YOUR DEPOSIT WITH THESE SIMPLE BUDGET HACKS

Saving up the money for a deposit on a house can be difficult in today’s economic climate, especially when many South Africans are battling salary cuts, retrenchments, and unemployment. That said, a sizable deposit can make a world of difference to the long-term affordability of your home. Tightening your belt for a few months could be an extremely wise decision.

“Having capital available for a deposit affects your home loan in several ways,” says Tony Clarke, Managing Director of the Rawson Property Group. “Firstly, it shows the bank you are financially responsible, which lowers your risk profile. Secondly, it reduces the size of the bond you’ll need, which also decreases risk from the bank’s perspective. Thirdly, with a low-risk profile, you’ll 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’ll pay over the life of your bond by hundreds of thousands of rand.”

Besides the financial benefits, a deposit can also go a long way towards strengthening your offer to purchase. Sellers and estate agents see deposits as good indications of a buyer’s ability to secure a loan.

“The actual amount of the deposit varies from sale to sale,” says Clarke, “and can be negotiated with the seller based on your financial outlook. This is often much easier to do with a pre-qualification certificate from a bond originator like Rawson Finance. At present, deposits are averaging at over 9% but were around 16% a year ago, so you can’t always take the standard 10% rule as a given.”

So how, exactly, does one save up anything from 9% to 16% of a home’s value? The answer is little by little, and step by step. Clarke shares a few suggestions to start saving towards that deposit:

KNOW THE FIGURES

The first place to start with any saving endeavour is to get a comprehensive overview of your financial situation. You may discover that you can cut things that don't add very much to your life and save you a few hundred rands each month. If you have several accounts, this will require you to source all the current statements for all your accounts so that you can begin to build a picture of your current financial status. You want to get a total overview of what you own and what you still owe. Once you have a full picture of your spending habits you can make informed decisions about what you can feasibly cut out of your budget and keep what you're not prepared to give up.

COOK MORE, BUY LESS CUT BACK ON CREDIT SELL YOUR UNWANTED AND UNUSED ITEMS 5 SEPTEMBER 2020

Instead of grabbing ready-made meals, ordering in, or eating out, try planning and cooking a few quick and simple meals at home. It might take thirty minutes out of your day, but the savings add up – and it's healthier too! When grocery shopping, make sure you stick to your list and avoid adding extras. You've put in the hard work of planning your meals so try to avoid impulse buys. Keep it simple. Simple foods with less complex recipes are as delicious and are cost-saving. Keeping it simple helps with food wastage which can contribute a significant cost to your monthly budget.

Credit cards and store accounts might make life easier, but they’re also a way to spend unnecessarily. If you find yourself giving into temptation and shopping for more than the bare necessities, it might be better to close your accounts until your deposit is ready to go.

EXAMINE YOUR INSURANCE POLICIES AND CELLPHONE CONTRACT

Shopping around for insurance can reap some interesting results and you may find that there are better deals for the same or similar cover. If you're stuck at home and driving less, your insurer may decrease your premium. Review your car and household contents policies and contact your insurer. Don't be intimidated by asking for a better premium from your current provider. They may just surprise you with a lower rate. Choosing the right insurance is highly dependent on your situation. Educate yourself and do the research. Your cellphone contract is another item that can be reduced with competitive quotes. Consider decreasing your cellphone packages to save on unused data and airtime.

Do you have any old technology, clothes, furniture, and appliances lying around? There are plenty of great online marketplaces to sell your little-used or unwanted items. Many of us have made purchases over the years for some exciting new item, only to realise we didn't use it as much as we thought we would. These are the kinds of things that we can sell to bring in some extra cash.

Some of these tips might seem like they require a lot of effort and energy. It is well worth it when you can unlock extra money and create a secure future for your family.