“Many lending institutions have made deposits obligatory on properties over a certain price, with some banks requiring substantial deposits that can be as high as 30% of the price of the property. Very few grant 100% loans on properties over R1m,” says Ya’el Geffen, executive director of Lew Geffen Sotheby’s International Realty in South Africa.
“For someone who does not have the money available for a deposit, buying a home can be extremely difficult. Yes, there are a few options available to buyers in this situation. They can for instance apply for bridging finance. However, this is a short-term solution and is unviable if you do not have asset backing.
“What’s more, lenders usually charge premium interest rates on these kinds of loans, making them quite unfeasible. Sometimes, the approval of such loans can be subject to delays which can also compromise the buyer’s chance of securing the home before someone else does.
“It can be a very frustrating and disheartening process that results in many a potential homeowner quite literally kissing the house of their dreams goodbye,” says Geffen.
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