All South African banks have started offering 100% home loans again, but being able to put down a deposit makes it more likely that your bond application will be approved, says bond origination company ooba. If you’re looking at property for sale, your chances of getting a loan improve significantly if you have a deposit, the latest ooba statistics show. The strict requirements of the National Credit Act make banks more wary of awarding 100% loans, and the two major reasons for bond declines are having insufficient disposable income to afford the bond repayments, and a poor credit record. In addition, a larger deposit will result in more favourable bond terms, which can save you thousands in interest over the term of a loan. If you are looking at property for sale, it is therefore advisable to save as much as possible before you start making offers. While a deposit of 10% should improve your chances of getting a loan at favourable terms , it is advisable to aim for 20% or even 25%. With property prices increasing again – the First National Bank (FNB) house price index recorded its seventh consecutive month of positive year-on-year growth in June, with an increase of 12,6% - it is not that difficult any more for sellers to get decent offers for their property for sale. Having a deposit can also improve your chances of the seller accepting your offer, as a deposit translates into improved chances of concluding the sale successfully. According to FNB, the rise in house prices is mainly driven by increased demand for residential property, but it seems the pace of acceleration in year-on-year growth may be reaching its peak. June’s increase of 12,6% (or 7,2% if inflation is taken into account) reflects a month-on-month increase of 0,4 percentage point, down from 2 percentage points from March to April and 1,9 percentage points from April to May. In addition, household debt as a percentage of disposable income remains high despite the interest rate cuts, which is a further sign that house price growth might slow down to single-digit growth rates by the end of the year, FNB says.
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