As we enter 2015, most of us will be feeling that new year "sense of possibility" - a fresh chance to make improvements to our lives and examine our often long-held dreams.
So while you still feel invigorated by this wonderful new energy, take a few moments to think about how you can really save towards buying your first home - or perhaps it's simply time to upgrade to something bigger and better. It's all about small and incremental daily improvements, and as time ticks along unheeded, voilà ... suddenly one day, in the not too distant future, you'll be buying that dream property.
And won't it have been worth the small efforts you start making today...
If you're a first-time home buyer, it's good to know that the average deposit required is around 12% of the purchase price, according to bond originator ooba's latest November 2014 statistics. The average purchase price for first-time buyers was R750 820, requiring a deposit of R90 390, while the average age of first-time home loan applicants was 34 years old. So if you're young and impatient, don't fret - just save, save and save some more. And if you feel like it's too late, give yourself a pep talk and do the same... save today and it will surely happen, often sooner than you think.
Overall, the average purchase price of property, according to ooba, was R992 162, with a deposit of 17.6% or R174 985 required, while the total bond approval rate was 73%, equating to more than seven out of every ten home loan applications being successful. The prime lending rate is currently at 9.25%, with ooba figures showing prime plus 0.51% as the average interest rate on approved home loans. At least you have some idea of what you're looking at so you can play with numbers using Property24's bond and affordability calculators.
If you've tried applying for a home loan before and been turned down or have been too afraid to attempt it in the first place, take heart, it's a brand new year and time to try again.
But first, you'd be wise to prepare for a successful home loan application - and step 1 is making sure you deposit saved up saved up, which will give the banks more confidence in your ability to afford the repayments. Also, sit down and do a budget - you can even find smartphone budget apps that will make it easier - and know what you spend on what every month.
- Analyse your spending habits - ideally use a spreadsheet so you can keep recording your spending and not lose the piece of paper you wrote it on - do it once, properly.
- Put down your fixed monthly expenses like car loan repayments, rent, electricity, insurance and any other debit order deductions.
- Do you have other debt obligations? What are they and can you pay them off and close accounts? Clothing accounts are often the worst money guzzlers, and if you've bought other items on hire purchase, pay them off as quickly as you can. In assessing your affordability, banks look at your debt and also your access to credit - after all, if you have a few clothing accounts and one too many credit cards, even if you're not using them all, they could assume you might at some point in time go on a spending spree. This obviously makes you a riskier bet, so adopt a lean approach and trim down on excess cards and credit facilities.
Unless you're already highly organised, you'll probably need to spend about six months getting your bank account and spending habits in order before applying for a home loan. Banks look at your spending behaviour and want to be sure it is consistent and you're a good bet.
Here are 10 simple ways to save towards your home deposit...
1.Stop buying lunch - Most people think nothing of buying a meal, and usually we're so hungry at lunchtime that we feel quite justified in spending on food. But what if you planned a bit better and spent 10 minutes before leaving home packing a wholesome lunch and a few healthy snacks for teatime? Add up what you have actually been spending every day and you'll likely be amazed at how much you can save. A pie at a garage stop can cost you R17 to R20 and a cooldrink could be another R10. That's not the healthiest meal, but it's one of the cheapest and it will still cost around R30. That's about R150 a week, if you do it every day, or R600 a month you can easily save.
2. A cappuccino a day... - I used to religiously, every morning after an hour's work, go across to the Mugg & Bean in Umhlanga Ridge when I lived in Durbs and buy a takeaway cappuccino. It was my daily treat, but after a few years I worked out just what I was spending on my habit each month and decided to make it a special treat once in a while, when I really felt like it. That saved about R300 a month at the time, but nowadays, a cappuccino might cost about R20, so you could probably easily save R400 a month on your coffee habit. Buy some decent coffee and keep it at the office, but treat yourself on special occasions - just put it in your budget.
3. If you're a smoker, give it up - This is always a touchy subject and habits are hard to break, but do yourself a favour and add up exactly what it costs you each month. A packet of smokes can cost between R28 and R32 and up to R40 if you buy them at a convenience store. If you smoke a pack a day, you could easily be saving yourself in the region of R1 000 a month. Find a bigger reason to drive you - like saving for your dream home!
4. A gym membership you don't use - Gym is a wonderfully healthy activity, but let's face it, how many people who are signed up actually go? If you love it and are happy with what you pay, then skip this part. If you're not doing it through a medical aid loyalty plan, consider this option to save some cash, as the monthly subscriptions are substantially less. Also, if you have a countrywide membership but only use your local club, then make the call today, and change it to one club. And if you really don't like gym and know in your heart that you will hardly ever go, then do yourself a favour and cancel it - rather find another activity that you actually enjoy, maybe walking with friends, jogging, dancing or whatever makes your spirit soar.
5. Beware your mobile phone - If you're on contract and coming up for renewal, check your options first. You can port your number to other network providers, so if you find a better deal, it may be worth considering. Also, you might look at buying a phone and rather using the various pay-as-you-go options, which in many instances have become very affordable. Do your research carefully and you may well be able to save a few hundred rand.
6. Make eating out a budgeted treat - We all love eating out or getting takeaways, especially after a busy day at work. But do your sums and work out exactly what this is costing you. Decide to allow yourself a certain amount in your budget each month, and make it a special occasion to look forward too. You could even decide to try one new restaurant a month, so that it becomes a whole new way of experiencing things.
7. Shop around for insurance quotes - Often your car has got older but you've never thought to call and ask your insurance company to reduce the rate. In my experience, they generally don't offer you a reduced rate and even put it up sometimes. Ask and if you're not happy, find a better deal. It takes no time at all to fill in a few online insurance quote forms.
8. Always go shopping with a list - We think we just need a few things, so pop into the supermarket, and end up coming out with a trolley-load of items we probably don't really need. Nowadays, this can cost you a bundle. Do a monthly shop for household cleaners and other items you know you need - and work out where you get the best value and specials, as well as loyalty points. You'll need fresh items at least weekly, but be disciplined and write that list!
9. Stop paying for parking - Most shopping centres give a certain amount of free parking time, so try and stay within the time and shop when it doesn't cost you. You'll be surprised at how much the little amounts fed to parking meters or given to car guards add up.
10. Think about public transport or share a ride - Even though the petrol price has just dropped, if you travel far and it costs you a lot in fuel and car maintenance, it may be worth investigating whether there are any public transport options that could work. If you're driving, take the savings you're going to get from this latest petrol price decrease and start your home deposit savings account today.
They says it takes 21 days to establish a new habit, so expect to feel some resistance at first, we're all human after all. Don't deprive yourself entirely, but budget in your fun times so you know exactly what you can spend each month. It will take away a lot of the anxiety about money, especially as you watch your savings grow.
One of the secrets to success is having a 'container' in which to save all this money - open a separate savings account or look at your options for investing that cash in a fund that will show good growth for the period you need it. It would be wise to get advice from an investment advisor, so you understand what will suit you best, rather than just hoping you're doing the right thing.
Good luck and here's to a prosperous new year and buying property in 2015! - Julia Hinton
Take a moment to tell us where you're at in Property24's home buyer survey.
What else are you paying for that you don't need or use? If you have other suggestion for saving, share these and add a comment below...
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