One of the biggest misconceptions I encounter as a bond originator is this:
“I can’t buy a home because I don’t have a deposit.”
For many first-time buyers, that belief is enough to stop them from exploring their options altogether.
The truth is a little more nuanced.
While having a deposit can strengthen your home loan application, it isn’t always a requirement.
Every application is assessed on its own merits, taking into account factors such as your affordability, credit profile, income, the property you’re purchasing, and each bank’s lending criteria.
What Is a Deposit?
A deposit is the amount of money a buyer contributes towards the purchase price of a property.
For example, if you’re buying a property for R1 million and you contribute R100,000, your deposit is 10%.
The remaining amount would then be financed through your home loan.
Is a Deposit Always Required?
Not necessarily.
Some buyers may qualify for 100% home loans, meaning the bank finances the full purchase price.
Others may be asked to contribute a deposit depending on their individual financial profile or the bank’s assessment of the application.
This is why it’s important not to rely on assumptions or advice based on someone else’s experience.
Every buyer’s situation is different.
Does Having a Deposit Help?
Yes.
A deposit may:
- Reduce the amount you need to borrow.
- Lower your monthly repayment.
- Improve your loan-to-value ratio.
- Potentially strengthen your application.
But it is only one piece of the overall picture.
Banks also consider affordability, income stability, existing debt and your credit history.
What About Transfer Costs?
This is where many first-time buyers become overwhelmed.
Even if you qualify for a home loan, there are often additional costs associated with purchasing a property.
These may include transfer costs, bond registration costs, insurance and other expenses.
The good news is that some first-time buyers may qualify for a cost-inclusive home loan, depending on the bank’s lending criteria and their individual circumstances.
It’s another reason why obtaining professional guidance early in the process can make a significant difference.
Don’t Rule Yourself Out
One of the saddest conversations I have with buyers is hearing:
“I wish I had known this years ago.”
Too many people assume they don’t qualify without ever asking the question.
The reality is that homeownership may be more achievable than you think.
The first step isn’t saving for years while guessing what you might need.
The first step is understanding your options.
Final Thoughts
A deposit can be beneficial, but it shouldn’t become the reason you abandon your dream of owning a home.
Every buyer’s journey is unique.
If you’re considering purchasing your first property, start by understanding your affordability and exploring the options available to you.
You may discover that buying a home is closer than you think.
Download our FREE First-Time Home Buyer’s Guide for practical advice, checklists and everything you need to know before purchasing your first home.
At InstaBond, we believe informed buyers make confident buyers.
