In defence of property deposits
http://www.iolproperty.co.za/roller/news/entry/in_defence_of_property_deposits
Homebuyers may be complaining now about having to save up deposits of 10% or even 20%, but they’ll probably be glad they did after next year, when interest rates and home loan repayments may well increase.
“The strong rand is helping to keep inflation and interest rates down at the moment,” says Harcourts Africa CEO Richard Gray, “but this situation could change within a few months, and at that stage those who kept their bond repayments down by paying a deposit will be pleased they did.”
In addition, he says, homebuyers need to consider the fact that the costs of running a home are rising all the time – with electricity charges, for example, set for another huge hike next year. “As unpopular as it is, and as difficult as it sounds, saving up for a deposit, rather than financing 100% of your home purchase, could be a budget lifesaver in future.”
Ideally, he says, homebuyers should try to have a full 20% of the home’s price available as a deposit. “With the national average home price now above R800 000, this is obviously a lot of money. However, those whose determination to save wavers should keep the likely benefits in mind – and especially the fact that they will be putting themselves in a very strong position to negotiate a below-prime interest rate.
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