Data from Jackie Smith, Head of Buyers Trust, shows the power of a deposit when buying a home. Not only does it reduce your monthly payments, but it also means significant savings in total interest paid. Just a 15% deposit saves almost half a million Rand when taking an R1.5million bond – and that’s huge. Heck, it’s enough to fund your tax-free account lifetime limit.
The data below is for an R1.5million bond over twenty years at a 9% interest rate.
0% deposit on a R1.5 million home:
- Monthly repayments: R13,496
- Total amount repayable: R3,239,013
5% (R75,000) deposit on a R1.5 million home:
- Monthly repayments: R12,821. Monthly savings (versus no deposit): R675.
- Total amount repayable: R3,077,063. Total savings (versus no deposit): R161,950.
10% (R150,000) deposit on a R1.5 million home:
- Monthly repayments: R12,146. Monthly savings (versus no deposit): R1,350
- Total amount repayable: R2,915,112. Total savings (versus no deposit): R323,901
15% (R225,000) deposit on a R1.5 million home:
- Monthly repayments: R11,472. Monthly savings (versus no deposit): R2,024.
- Total amount repayable: R2,753,161. Total savings (versus no deposit): R485,852
That 15% deposit saves you almost half a million Rands over the term of the loan. Now sure that’s a big deposit. But the savings mean that it is well worth delaying buying a home in order to save a deposit. Alternatively, buy down at a lower price point so that a smaller deposit can still maximise your savings.
Further, if you rather paid R13,496 (the montly payment amount for no deposit) instead of the lower R11,472 you pay the home loan off six years early.
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