Benefits of saving for a home loan deposit

Momentum Savings

5 MIN READ

As soon as people start working, they may dream of owning a place. Buying a house or flat is a huge commitment, and with more pressing financial needs when you start out, it can be overwhelming.

Remember, making your house feel like a home carries an investment of its own!

If you plan to take out a home loan here’s one thing you can do to reduce the cost of buying your home.

Save for a deposit as your first step

This will ensure a better deal and a better interest rate. It shows the bank you can save and commit.

Let’s look at an example of what difference a deposit can make to what you’ll pay overall.

How you’ll benefit from a deposit on your home loan

With some commitment early in your career, a dream home can become a reality sooner than you think. With a little bit of imagination, you can smell the roses and hear the birds singing already.

You lower the interest rate with a deposit and save on the total cost of your bond

The lower interest rate and capital amount reduce the total interest you’ll have to pay over the 20 years of the bond by R382 200. Full repayment (R3 380 400) – deposit (R135 000) – lower interest (R382 200) = R2 863 200.

You pay a lower monthly instalment

It also reduces your monthly instalment by almost R2 155, from R14 085 to R11 930.

No matter where you are in your home-buying journey – chat with a financial adviser to help you find the best savings options for your personal goals.