Property News and Home Loan Tips
You may not need one right now, but it is time to begin saving for a deposit if you intend to buy a new home in the coming years.
Reading the trend among South African banks, its not hard to see that buyers will soon require a large deposit to qualify for a home loan.
For the moment ABSA Home Loans, who is currently the largest mortgage lender in the country, are offering 100% bonds and in some instances even up to 110%. These home loans are reserved for those who have a ‘squeaky clean‘ credit record, or for clients who fall into the low-income bracket.
Going forward ABSA Home Loans will be focusing of offering on 85% home loans. This means that as a buyer you may need to put down a deposit of about R150 000 on a property worth R1 million.
Tom Boardman, former CEO of Nedbank, said recently that 100% home loans are an anomaly and that people have to get back to saving deposits if they wish to buy a new home.
Please note that ABSA and Nedbank will currently lend you the full 100% bond under the right circumstances, but if you plan to upgrade your quality of living in the future it would be best to begin saving now. And save aggressively.
Recent statistics show that South Africans are only saving around 1% of their income. If banks do eventually shut the door on 100% home loans, homeownership could become a distant dream for most buyers.
Sellers should also take note of this trend, as property prices could take a knock if potential buyers are forced to rent, while they try to save up a deposit.
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