Weekend Argus (Saturday Edition)



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:


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.


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.


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.

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