According to the poll, 27% of respondents believe that a 100% bond is reasonable, while 42% said a deposit of 10% was reasonable and 12% of respondents said they believe a deposit of more than 30% was reasonable.
However, according to Craig Deats at ooba, while all banks have again started offering 100% home loans, being able to put down a deposit does make it more likely that your bond application will be approved.
"In the last few months, we have seen a significant increase in applications with low or no deposit.
"Although it is possible to have your home loan application approved on this basis, it is less likely as the introduction of the National Credit Act (NCA) has resulted in more stringent lending criteria than was applied in the past," said Deats.
He said that currently, the two major reasons for bond declines are having insufficient nett disposable income to afford the bond repayments and a poor credit profile.
He added that besides improving one's chances of getting their home loan approved, a bigger deposit could result in a more favourable bond rate which will save you in interest over the term of the loan.
"As a home loan is paid back over a long period, generally between 20 and 25 years, even a small deduction in the interest rate on your bond, can save you thousands in interest payments over time."
Deats said that some sellers are also more willing to accept an offer if the buyer has a deposit, as there is a higher likelihood that they will complete on a sale. – I-Net Bridge
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I am not writing this as the chairman of the Camelot Body Corporate, just using the e-mail address because it's convenient.
I am surprised to see the number at only 27% who favour 100% bonds. I thought the number would be very much higher. My very first bond in 1988 was a 100% conditional on other factors imposed by the lending bank. I would imagine that lending institutions are hesitant to grant 100% loans especially with today's credit crunch and people living beyond their means. It also depends largely on the type of housing the lending institution is granting a 100% bond on. I imagine a 100% bond is fine on a sectional title unit under R500,000 but should it be a huge purchase price in excess of R1-million, then the applicant must have at least 20% deposit.
In 1978 I was granting housing bonds in Johannesburg and spending R11-million a month. I guess that's pocket change these days. - Ian Samson
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