Poll: Bond deposits not ayoba

Over a quarter of South Africans polled do not feel that it is reasonable to have to put a deposit down when buying a home, said a survey by bond origination company ooba released on Tuesday.

The survey found 27 percent of respondents believed that a 100 percent bond was reasonable, while 42 percent said a deposit of 10 percent was reasonable.

Twelve percent of respondents said they believed a deposit of more than 30 percent was reasonable.

However, spokesman Craig Deats said that while all banks had again begun offering 100 percent home loans, being able to put down a deposit made it more likely that a bond application would be approved.

"In the last few months, we have seen a significant increase in applications with low or no deposit."

Although it was possible to have a home loan application approved on this basis, it was less likely as the introduction of the National Credit Act had resulted in more stringent lending criteria than were applied in the past.

"Currently, the two major reasons for bond declines are having insufficient net disposable income to afford the bond repayments and a poor credit profile."

Deats said besides improving the chances of having a home loan approved, a bigger deposit could result in a more favourable bond rate which would save the home-owner 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 some sellers were also more willing to accept an offer if the buyer had a deposit, as there was a higher likelihood that they would complete the sale.