Buying a house? Congratulations!
Now that you have decided to take one of the most important financial decisions of your life, it is also important to know how much to budget and prepare for. One of the biggest payments you will make for your house is the deposit.
In South Africa, the deposit on buying a property is 10% to 20% of the original price. But is it important to put down that large chunk of money? Absolutely!
Gumtree tells you why.
- Commitment: Paying a deposit shows that you are committed to making this large financial deal and can burden a certain amount of risk. The deposit also proves that you are financially viable to buy property. This can also be favourable in the minds of the bank when approving your home loan application.
- Lower interest: Once you pay the deposit, the bank sees this as a positive step and reduces the instalment as you are now borrowing a smaller amount. This, in turn, reduces your home loan interest in the long run.
- Easy to negotiate: As mentioned, the payment of a deposit is looked upon favourably by the bank not only in terms of approving the home loan, but also for you to negotiate for a better interest rate.
- Teaches you to plan: Putting down a deposit prepares you for the long term. You will have to ensure you always have the required funds and mental preparedness to make monthly repayments for a long period of time.
Thus, saving towards a deposit just makes financial sense!
Now that you’ve got the knowledge, it’s time to shop! Head to gumtree.co.za or your Gumtree app (click for Apple & Android) and don’t forget to use your location settings to find property close to home.