Guiding consumers since 2009

Raise a deposit for your house in 5 steps

By Athenkosi Sawutana

If you’re a first-time home buyer, you could be lucky enough to be  approved for a 100% bond, but if you aren’t, a 10% deposit might be required. This  could be a daunting prospect. However, a few financial tweaks to your lifestyle and spending habits could get you a foot in the property door and, once you’ve purchased a property, significantly reduce your long-term bond repayments.

Tip: Click here to find out how you can finance your dream home.

According to Buyisile Maseko, growth head at FNB Home Finance, you can take these five steps to immediately start saving for a deposit:

1. Save first – Before you start cutting back on all your expenses, you should come up with a definite savings plan and time frame.

In order to stay motivated, you will need to strike a balance between saving and living within your means on the one hand, and the temptation to overspend every time you go shopping, says Maseko.

The best way to do this is to decide on a specific amount to save each month and put it aside when you pay all your accounts, he adds.

If you manage to add a little more to your minimum savings amount during the month that would be a bonus and as you get into the habit of saving, you will enjoy finding creative ways to reach your goal faster.

Put your savings away at the beginning of the month. Aiming to save what’s left over is not as efficient. And put your savings into a call account where you can reach them if you need them, but it’s not easy to access them on a whim. You’ll also get more interest.

ALSO READ: A guide to purchasing a home

Also consider opening a separate bank account for your deposit savings. Opening an account specifically for your deposit savings offers you the best interest rate and the lowest banking charges, this also helps to remove the temptation of using the funds as you can’t access them as easily.

2. Consolidate debt to pay a lower interest rate – you need to work at paying off any credit card or store card balances as soon as possible, and then diverting whatever cash was going towards those debts into your deposit savings account.

A good way of doing this is to consolidate your debt (e.g. clothing account, furniture accounts, micro loans, etc.) into a single loan with lower interest. This will not only save you on monthly admin fees, and help to simplify and ‘declutter’ your debt, but also result in you paying less interest over the term of your loan, says Maseko.  

He says these savings can make a big difference in how much you pay and give you room to raise your deposit.

Keep one credit card for emergencies only (the one with the lowest interest rate) and stop buying anything on “budget” terms, or layby, or hire purchase. In addition to boosting your savings, this will also improve your credit profile and your chances of being approved for a home loan.”

3. Manage your discretionary purchases – Telco services, such as data and airtime, are a big spend for most people. Most telco providers do however offer special deals and it’s important to take full advantage of these in order to generate some savings.

Also, look at how much you are spending on take out. Preparing your meals is a significant saving. Keep takeaways for emergencies only, or a once-a-month treat.

4. Downscale temporarily by giving up luxuries and convenience – Another consideration would be for you to downscale your lifestyle i.e. moving to a smaller rental unit for two years for you to pay less rent.

It’s only temporary, and when you leave the smaller place, it will be to move into your own home, which could be considered a worthwhile sacrifice. You’ll find that giving up the ‘little luxuries’ for a while can make a really big difference to the time it will take to accumulate a deposit.

Take a break from any expensive subscription for a few months - for example, your digital or entertainment subscriptions.  Take up running instead of a gym subscription, or stick to home-cooked meals instead of eating out or buying takeaways, and you’ll be stunned how much extra you’ll be able to save towards your deposit.

5. Save all extras and use your loyalty programmes effectively – Put all your bonuses, tax returns, gifts, or commission into your savings account. In addition, free rewards programmes can give great value to customers.

Once you’re ready to put down your deposit, remember not to exceed your budget - it’s easy to fall in love with a bigger home, but remember - this is your start-up.

Buyers should purchase what they can easily afford and look for homes that offer letting opportunities, says Maseko.

Let Justmoney help you make your dreams a reality. Click here to apply for a home loan. 

Recent Articles

Featured Times are tough, but keep your debt under control

While the whole world is going through a rough patch, you may also be feeling the pinch. With the country in crisis, it may be difficult to keep up with your debt instalments. However, abandoning your debt obligations is not the solution.

Debt Series Part 2: Interest rates - unpacked

In the second part of our Debt-ucate series we explore interest rates –from how to get a better rate to what influences it, and how this affects the cost of your debt.

Debt counselling – the two sides of the coin

Being overindebted doesn’t just put a strain on your personal finances; it also puts a strain on your state of mind. The best solution is to start the process of debt counselling so that you can escape the debt cycle. But what are the ups and downs of joining this debt relief programme?

Travel ban – how to claim for the loss incurred

As with the recent Covid-19 pandemic, governments sometimes issue travel bans to prevent people from travelling to other countries. This becomes even more complicated if you’ve already planned and paid for your trip. Your flights will be cancelled, and you may lose money from cancelled accommodation arrangements. How do you claim for the financial losses incurred due to a travel ban?


Get 30% back when you fill up with your Absa card

Price: Available on request
When: Daily
Where: Nationwide

Get 50% back in eBucks when you apply for an FNB home loan

Price: Available on request
When: Daily
Where: Nationwide

Get 50% off your online fees when you pay with Capitec card

Price: Available on request
When: Daily
Where: Online