Are property deposits worth it?

April 21, 2024
Frugal Local
Frugal Local

Leverage your property deposits

Why pay a deposit?

When you have the money available for a deposit, you can use this two ways as leverage. 

The first way is by negotiating a better purchase price on your property. You can tell the agent that you have a deposit of R x, which justifies the lowering of the purchase price. 

The second option is to apply for the full amount as a loan. Quite often the bank will not give you a 100% loan. Because you have money available, you can pay this as a deposit. 

If the bank gives you a 100 % loan, you have the opportunity to negotiate with them for the interest rate. Once you received a grant (sometimes called a quote), ask the bank/mortgage originator to negotiate for you again based on you paying a deposit.

Remember, you need to negotiate the best deal possible when buying and selling property 

What a deposit does for you 

In the most logical sense, a deposit will lower your repayments to the bank. This means less interest payable and more money compounded in your pocket!

Where to save for a deposit?

Put the money away in a 32-day notice or money market. Dont put it in your Tax Free Savings Account TFSA or into an ETF these are for long term investments.

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