Ways to save for a mortgage deposit

Saving up money for a deposit on a house can be difficult in today’s economic climate, especially when you consider the transfer, attorney and bond fees that you have to pay.

Managing director of Rawson Property Group, Tony Clarke said, “Having capital available for a deposit shows the bank you are financially responsible, which lowers your risk profile. It also reduces the size of the bond you’ll need, which also decreases risk from the bank’s perspective.

“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.” He explained that at present, deposits, which vary from sale to sale, are averaging at more than nine per cent, but were around 16 per cent a year ago, so you can’t always take the standard 10 per cent rule as a given.

Clarke provided some tips to help you save for a deposit:

•  Cook more, buy less and save up to R3 000 per month by avoiding ordering in or eating out a lot.
•  Take a packed lunch to work instead of forking out R40 to R60 every day and forgo that R20 morning cappuccino, and save R1 800 a month on work-related food costs alone.
•  Cut back on unnecessary spending through credit and save up to R1 000 per month.
•  Ask for an insurance re-evaluation and save up to R800 per month. Your insurance premiums go up every year, but the value of a lot of insured items actually goes down as they get older.
•  Think twice before taking a cellphone upgrade and save up to R500 per month or find the most affordable contract for your needs.
•  Cancel that wasted gym membership and save up to R800 per month and try home fitness routines available online that do not cost a cent.

“These tips could save you as much as R6 100 a month, which would give you a 10 percent deposit on a R1 million home in just over a year,” concluded Clarke.

Details: Rawson Finance 021 658 7100.