At this point, South Africa is sitting pretty in a buyer’s market. What this means is that there are more homes for sale than buyers, so buyers have their pick. And you might be thinking, well the banks have gotten stricter so there aren’t as many buyers as everyone is saying. This is true, but while there are fewer buyers in the market, the buyers who have made it through and qualify to buy a home mean business.

As a prospective buyer, you’d want to be one of those fortunate few who gets home loan approval from the bank. One of the key ways to achieve this is to save for a deposit. Simply, a deposit is a sum of money that counts as your initial contribution to the purchase price of a property. Knowing this, you can understand that being able to put some skin in the game could greatly improve your chances of getting home loan approval from the bank, with a better rate. Much better than if you didn’t put down a deposit.

Some of why this is so, is because a deposit reduces the amount that you’re borrowing, so the risk of not paying a bond that’s too high is also reduced. Having a deposit also speaks to your financial behaviour, indicating that you have sufficient and regular income in order to manage your money and save for the deposit. It tells that bank that you can be trusted to then continue managing your money and pay off your bond.

If you’re eager to save for a deposit, then let us help you with a few essential budgeting tips.

Work Out What You Can Save

This is the time to sit down and look at your budget. What can you cut out or reduce in order to save? If you haven’t already, this is the time to draw up a budget so you can track your projected spending against your actual spending – it’ll make it much easier to identify costs that you can weed out, like your morning cappuccino and or those extra trips to the grocery store that cause you to go over your food budget.

Switch To Cheaper Providers

While you can stop spending on things like takeaways, there are some costs that are unavoidable. Like your insurance, medical aid, and even the amount you’re spending on bank charges. Shop around to find cheaper service providers so that you can reduce these kinds of recurring monthly expenses. Every little bit counts and can be put towards your deposit. An example is finding great deals on home insurance. You can compare multiple home insurance quotes to see which is more affordable and suited to your needs.

Find Out Your Credit Score

Banks place a lot of importance on your credit score, which is why you need to find out what your current score is. It’s easy enough to get a hold of – AA Inform will provide you with a free credit report.

In your free credit report, you’ll find personal information, including names, ID number and if it could be verified by the DHA (Department of Home Affairs), contact information, and employment information. In terms of your payment and credit history, you’ll see your credit score, payment profile, judgments, debt review flag/indicator, any fraud or possible fraudulent information, and even who has enquired or viewed your credit report.

Take Action

A good credit score vastly improves your chances of qualifying for a home loan, so once you’ve got your report, read over it carefully. And then take action. You may need to close accounts that aren’t being used, reduce limits that have high available balances, plan to reduce debt that’s raising red flags (credit cards are a big old red flag), and if you see any accounts reflecting slow payments, arrears or legal status, you can make a plan to deal with it immediately.

Feeling informed?

Sticking to a budget isn’t easy, but by making a few financial adjustments you can save enough to put down a deposit and be in a much stronger position to get approved for a home loan, with a better interest rate.

Don’t forget that AA Inform is home to a range of useful tools and resources, including access to a personal budget calculator, a home affordability calculator, and even a free property valuation report so you can see if the house you want to buy is actually worth the price.