A deposit can make buying your first home more affordable and may improve your chances of securing a home loan. While some buyers may qualify for a 100% home loan, certain sellers require a deposit as part of the Offer to Purchase.
A deposit is typically around 10% of the purchase price, although 10–20% is often recommended where affordable. A larger deposit means borrowing less, reducing monthly repayments and the total interest paid over the life of the loan.
A deposit can:
- Improve your chances of bond approval
- Potentially secure a better interest rate
- Reduce monthly repayments and long-term interest
- Strengthen your position when negotiating with sellers
Deposits are generally held by the transferring attorney in a trust account until the property transfer is registered.
Even without a deposit, buyers should budget for bond and transfer costs, which can amount to roughly 10% or more of the purchase price.
SAVING FOR A DEPOSIT
To save R100,000 over two years, you would need to put away approximately R4,200 per month.
Consider:
- Cutting unnecessary expenses
- Cooking at home and buying in bulk
- Reviewing insurance, phone and vehicle costs
- Reducing rental or transport expenses where possible
- Starting a side hustle for additional income
- Putting bonuses, commissions or gifts towards your savings
Building better saving habits can also support your credit profile and improve your chances of securing favourable bond terms.
BEFORE APPLYING FOR A HOME LOAN
When completing a home loan application, ensure your living expenses are accurate and not duplicated. Be honest and distinguish between essential needs and discretionary spending. Banks may verify your declared expenses against your payslips and bank statements.
