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Q: Is a deposit absolutely necessary when buying a home?

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And, if I can buy it without a deposit, is this a good idea?

A: It is still possible for a bank to grant clients a 100% home loan, which does not require a deposit, but we strongly encourage first-time homebuyers to consider putting down a deposit of at least 10% of the value of the property to ensure that their home loan repayments are reduced and more manageable.

A deposit also demonstrates that clients have the financial means to make the purchase and are comfortable in taking on some level of risk until the deal closes.

It’s an excellent way to further prove that you are ready to take on the costs and responsibilities that come with homeownership. Paying a deposit will improve your chances of having your home loan application approved and will place you in a better position to negotiate more favourable terms.

The benefit is that you will be seen as providing equity into the deal, thus reducing the bond amount required.

Putting down a deposit will also place the client in a better position to negotiate a more favourable interest rate which will further reduce the interest rate and monthly instalments, allowing you to repay before the term completes.

In addition, saving for a deposit is a great practice run for the commitment that will be required to ensure that you have the required funds and mindset to fulfil the obligations of monthly repayments in the long term. – Mfundo Mabaso, FNB Home Finance growth head

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