Swemmer & Levin

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Bigger deposits mean a smaller loan and a better interest rate

Rising inflation and several interest rate hikes have many South Africans trying their best to keep their costs down where possible, and this has also translated into their homebuying behaviour.

The Q2 ’22 oobarometer statistics, released by ooba, reveal lower-than-expected home price inflation from the last quarter. This has resulted in property becoming more affordable in certain regions (in real terms, i.e. after the effects of inflation are stripped out), enabling homebuyers to put down larger deposits.

However, it’s interesting to compare buying behaviour across the various regions, and to identify areas where homebuyers are prioritising deposits.

Deposits are a great way to reduce the size of one’s monthly and total home loan repayments, and to negotiate a better interest rate from the banks. While the oobarometer only observed a 0.4% growth in the price of property quarter-on-quarter, the average size of deposits experienced a 16.4% increase.

We also observed that in many regions, the average deposit size was significantly higher than the national average of 7.8%. In the Western Cape, which is currently the region experiencing the most homebuying activity, the average deposit size is a whopping 17%.

This could be attributed to increased semigration and the scarcity of property supply in the region, resulting in homebuyers needing to put down a larger deposit to secure their dream home.

Tips for saving for a deposit

With the largest deposit amounts in various provinces, including the Western Cape, Limpopo/Polokwane, Eastern Cape, KZN, and Gauteng North/East Rand exceeding the generally recommended 10% deposit, it’s clear that consumers are making smart choices and prioritising long-term savings over short-term gains.

The benefits of putting down a larger deposit are primarily financial, but they also indicate to both the seller and the banks that the buyer is serious about their purchase. This results in a higher chance of approval, and more favourable interest rates.

While putting aside money for a deposit may be a daunting prospect in these challenging economic times, here are some budgeting tips to make saving up easier:

  • Set a goal. Start by receiving a pre-approval to determine what size bond you will qualify for. Set a realistic savings goal of 10% of that total amount, considering your timeline for buying a home. This will give you an indication of how much you will need to put aside each month to reach your goal by your preferred deadline.
  • Draw up a monthly budget. This involves tracking your monthly expenditure and cutting down on unnecessary impulse purchases. Go through your bank statement to determine where you can cut back—this may be in the form of a debit order that’s no longer needed, or by reducing your daily coffee stops.
  • Get rid of credit card debt. The inflation on your credit card debt is eating away at your savings. Avoid making purchases that you can’t afford to pay back immediately, and speak to your bank about lowering your overdraft limit.
  • Put your savings in a separate account. This way you don’t risk tapping into your savings, as this account should be strictly off-limits. Make sure that the account is interest-bearing, to increase your savings efforts.

 

Finally, once you have successfully saved up for a deposit, make sure that your hard work doesn’t go to waste by ensuring that it is protected from cybersecurity threats. Third-party options, like Buyers Trust, offer you security, full transparency, free bank guarantees, and a high return on your investment as a result of it being stored in a maximum interest-bearing account.

WRITTEN BY JACKIE SMITH

Jackie Smith is the head of Buyers Trust (a subsidiary of ooba Group).

 

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice.

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Jan Fourie

Director |  Attorney, Notary & Conveyancer | BA. LLB

Jan graduated in 1974 with a five-year BA LLB degree from the University of Stellenbosch, whereafter he was admitted as an advocate and prosecuted as such in the Cape Town and Wynberg Courts. In 1974, he joined Swemmer & Levin as the Candidate Attorney of Mr Levin (founding member) and was admitted as an attorney on 7 April 1976, as a conveyancer on 11 January 1978, and as a Notary on 19 December 1984. Since 1974, he has served in various committees, including the West Coast Chamber of Commerce, the Vredenburg School Committee, and the Malgas Lions Club. 

Furthermore, Jan was the author of the first bilingual law book, The New Debt Collecting Procedures (Die Nuwe Skuldinvorderingsprosedures), which was used by all the Magistrate Courts throughout South Africa. With the founding of the Small Claims Court in Vredenburg, Jan served as one of the first Commissioners. He is currently based at Swemmer & Levin’s Vredenburg office and has been with our firm for more than 47 years.

Pieter Smit

Director | Attorney & Conveyancer | BA. LLB

Pieter obtained his BA Law degree from Stellenbosch University in 1995 and his LLB degree from the North-West University in Potchefstroom in 1998. He served his articles at Marais Muller Attorneys from 1998 to 1999 and was admitted as an attorney in 2000 and as a conveyancer in 2002. Pieter is the founder of PP Smit Attorneys, which opened its doors in 2004. He also became a director of Swemmer & Levin in 2006. Pieter loves the outdoors and participating in all forms of sport, including tennis, golf, fishing, spearfishing, scuba diving, and hiking. 

Johann Maree

Director | Attorney | BA. LLB

Johann matriculated at Oudtshoorn High School and attended Stellenbosch University, where he obtained his BA Law and LLB degrees. Following his studies, he worked for three years as State Prosecutor at the Magistrate’s Court in Cape Town. Johann completed his legal training with the State Attorney in Pretoria and then moved to his hometown, Oudtshoorn, where he worked as a lawyer for a year. In 1983, he finally moved to Vredenburg and joined Swemmer & Levin, where he is still practising as a director. When he is not in the office, Johann enjoys cycling and in his earlier days, he used to be a long-distance junkie.

Richard Phillips

Director | Attorney | Bcom & BProc

After matriculating at Paarl Boys’ High School, Richard completed his BCom and BProc degrees at the University of Port Elizabeth. He served his articles with Van Wyk Fouchee in Paarl and quickly developed an affinity for litigation. Richard has always had a deep love for the ocean and when he was presented with an opportunity to join Swemmer & Levin on the West Coast, he agreed without hesitation and has been with our firm since 1997. Richard specialises in general litigation and divorces. When he is not in the office or with his family, he tries to spend as much time as possible in or on the water.

Jandré Smith

Director | Attorney | LLB

Jandré grew up and matriculated in the small Klein Karoo town of Oudtshoorn. He furthered his studies at the North-West University in Potchefstroom, obtaining his LLB degree during 2015. He completed his articles at Swemmer & Levin in 2017 and was subsequently appointed as a professional assistant. In 2020, Jandré was promoted to the position of director at the firm, where he practises in the Litigation department at our Langebaan office. When not practising law, Jandré is an avid sports fan. He has a passion for nature and enjoys camping, trail running, and mountain biking with his family.

Andre van der Walt

Director | Attorney | LLB

Andre graduated in 2015 with an LLB degree from the University of Pretoria. He later went on to obtain his NQF 7 Certificate in the Administration of Deceased Estates from the University of South Africa, which allowed him to further his career in deceased estates and the drafting of wills and trusts. Andre served his articles at Barnard & Patel Attorneys under the supervision of Mr YAS Patel. After being admitted as an attorney in 2016, he continued working at Barnard & Patel Attorneys as a professional assistant in the deceased estates department.

Andre joined Van Rensburg Attorneys in 2019 and was head of the deceased estates department until 2021. He then received the opportunity to move to the West Coast, where he joined Swemmer & Levin Attorneys. Andre loves travelling and enjoys the beauty that our country has to offer with his friends, family, and loved ones.

Harmann Potgieter

Attorney | LLB

Harmann graduated in 2018 with an LLB degree from the North-West University’s Potchefstroom Campus. He went on to study and grow in various fields, including doing a course on the Consumer Protection Act and a course at the University of South Africa where he obtained his NQF 7 Certificate in the Administration of Deceased Estates.

Harmann completed his articles of clerkship at Swemmer & Levin under the supervision of Mr Richard Phillips. After being admitted as an attorney in 2020, Harmann continued with Swemmer & Levin as a professional assistant in the deceased estates department as well as the litigation department. He loves to study, possesses a deep curiosity about the world, and is dedicated to giving back to the community.

Carla Cloete

Attorney, Conveyancer & Notary | LLB

Carla obtained her LLB at the North West University, Potchefstroom Campus in 2015. She completed her articles in 2017 with Brits Dreyer Inc in Bellville. She is an admitted Attorney, Notary and Conveyancer. After her articles she relocated to Kimberley where she worked as a professional assistant in the Conveyancing department of Van de Wall Inc. Coming back to her Western Cape roots, she now joins the Swemmer & Levin team as a professional assistant.