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Q: How important is it to have a deposit when buying a house?

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And how much do you recommend?

A1: Having a deposit is always preferable. In most cases, banks offer you better interest rates when you have a deposit. This provides you with the knowledge that you have equity in your property. If anything unforeseen happens, and the buyer needs to sell, the ability to cover the outstanding bond and provide some leeway for fees and other related property expenses is provided for through the deposit money. – Shaun Rademeyer, chief executive of MultiNET Home Loans

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A2: Putting down a deposit when signing an offer to purchase is seen as a show of commitment. A deposit (usually 10% of the cost of the property) indicates to both the banks and the seller that you are a serious buyer. However, while deposits were once part and parcel of the home buying process, our latest statistics indicate that zero deposit home loan approvals are on the rise. During the first quarter of last year, we successfully obtained home loan finance for 80.7% of our applicants – 61% of who required a zero-deposit loan. – Kay Geldenhuys, head of sales fulfilment at ooba Group

A3: Although banks do approve loans up to a 100%, it is always an advantage to have a deposit available. Loans will be assessed against risk, and having a deposit reduces the bank’s risk, which can secure buyers a competitive concessionary interest rate of below prime. – Kevin Mountjoy, director of Bond Gallery

A4: While most buyers have an idea how much they can afford to pay each month towards their bond, few realise the importance of putting down a deposit when applying for finance. A deposit will make a significant difference when it comes to banks deciding whether to approve or decline a bond application. A deposit, even if just 10% of the purchase price, will go a long way to securing a better interest rate. Banks look more favourably at an applicant who appears to be a lower lending risk and paying a deposit suggests the applicant is able to manage their money. It also counts in a buyer’s favour when negotiating with a seller. Being able to put down a deposit signals intent. Sellers are more likely to consider an offer if they are dealing with a serious buyer. – Carl Coetzee, chief executive of BetterBond

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