Buying and owning a house is a huge desire for many South Africans, but the prospect of being able to do so may seem impossible. A great step that will help you move towards achieving this goal, is to start save for a deposit.
A deposit can put you in a strong position to get approved for a home loan, it gives potential home buyers the boost they need when applying for a home loan. The less you borrow from the bank, the less your monthly repayments will be, and the less your overall cost of the house will be.
By saving a substantial deposit, you also show banks that you’re self-disciplined enough to put money away, and probably have sound financial habits. Putting down a deposit if possible, also reassures the Seller that the Buyer is serious in their intention to buy the property.
Your monthly home loan repayments will be lowered by paying a deposit and depending on the relevant Bank’s criteria, you could be able to apply for a higher bond if you wish.
So where do you start?
Saving for a deposit on a house is easier when you break it up into manageable steps and when you set yourself a realistic goal
Here are some of our budgeting tips to help you save for a deposit….
Check Your Monthly Budget
Draw up a budget of your monthly expenses and decide how much you can afford to save per month
Root out those hidden items that creep into your budget that you can cut back on
Once you have decided where you can save and cut back, prepare a new budget and stick to it
Make sure that you put your savings away the minute your get your salary
Cutting Costs & Debt
One of the best ways to ensure that you can save for your deposit is to cut down on unnecessary spending – this can include cutting down on your current rent or putting your savings in a separate account
Credit card debt can be damaging to your savings and it’s a difficult cycle to break – try to avoid using your overdraft
If you are using your overdraft every month, try identify why and then avoid whatever spending is unnecessary
Bargain Hunt for the Best
Do what you can to buy what you need to at the best possible prices
Look at bank charges, your medical aid or your cellphone contract; there are a number of ways to reduce your recurring monthly expenses
Budgeting tip: A general guideline is to aim to have 10 to 12% of your dream property value set aside as the deposit, which is paid upfront.