Rising deposit requirements are making the path to homeownership feel steeper for many South Africans. But with the right approach, aspiring buyers can use this period strategically – building the kind of financial profile that not only meets banks’ growing expectations but actively improves their chances of bond approval and a competitive interest rate. Bradd Bendall, BetterBond’s National Head of Sales, shares practical guidance for buyers navigating the current lending environment.
Start with what you can afford
Before starting the property search, it is important to establish a clear picture of affordability. BetterBond’s online affordability calculator provides an indication of what buyers can afford based on monthly income. As a general guideline, bond repayments should not exceed 30% of gross monthly income. “It is important to start the homebuying journey with a clear understanding of how much you can afford and what you can realistically save for a suitable deposit,” says Bendall.
Get pre-approved before you start searching
Bendall recommends getting pre-approved before beginning the property search. Pre-approval indicates the maximum purchase price a buyer is likely to qualify for and provides repayment estimates based on different interest rate and deposit scenarios. “However, buyers should not necessarily spend the maximum amount suggested,” he cautions. “They should factor in additional costs such as transfer duty, conveyancing fees and attorney costs, while also considering the possibility of future changes to the prime lending rate.”
Given the current economic environment, Bendall says a smaller bond may be the more prudent option. “Buyers, particularly those entering the market for the first time, should avoid rushing into purchasing property they may struggle to afford over the long term.”
Aim for at least a 10% deposit
BetterBond Home Loans recommends a deposit of at least 10% when applying for a bond. This not only improves a buyer’s risk profile but also signals serious intent to purchase. For a first-time buyer purchasing a R1.4 million property, a 10% deposit equates to R140 000. The rewards are meaningful – the higher the deposit, the better the chance of securing a bond, and the more likely a bank is to offer a lower interest rate.
Use financial windfalls strategically
Buyers who are saving towards a deposit should treat any unexpected income as an opportunity. “Direct a thirteenth cheque, commission payment, tax refund or bonus towards your deposit savings,” says Bendall. Every lump sum that goes into deposit savings reduces the time spent on the sidelines and strengthens the eventual application.
Reduce debt and protect your credit record
A healthy credit record is as important as the size of a deposit. Bendall advises buyers to use the savings period to pay off credit cards and store accounts, which strengthens affordability, while younger first-time buyers may benefit from establishing a credit history that supports future bond applications. “Income stability, affordability and a healthy credit record all influence a bank’s lending decision,” he says. Organising financial documents and reducing existing debt in the months before applying can make a measurable difference to the outcome.
Explore government assistance
For qualifying first-time buyers, government assistance may help reduce some of the financial pressure. First Home Finance provides qualifying households with a once-off subsidy that can be used for a deposit, transfer costs or reducing the principal debt on a home loan. “Prospective buyers should investigate whether they meet the programme’s requirements before applying for a bond,” says Bendall. “Working with a bond originator can be particularly helpful because bond approval is required before applying for the subsidy.”
Work with a bond originator
Applying to multiple banks significantly improves the chances of approval – and may result in a better interest rate. “While one bank might require a strict 10% or 15% deposit based on their current risk appetite, another may be willing to look at a 100% loan product for the same financial profile,” says Bendall. A bond originator manages this process on a buyer’s behalf, ensuring the application is considered by several lenders simultaneously.
Should you wait or buy now?
There is no one-size-fits-all answer. Those with stable incomes, strong credit profiles and sufficient affordability may still qualify with a smaller deposit. Others may benefit from waiting until they are in a stronger financial position. “Depending on their circumstances, some buyers may be better off delaying a purchase by 6 to 12 months to build savings and improve their credit profile,” says Bendall. “A larger deposit could strengthen their application and potentially improve the interest rate offered by a lender.”
The key, says Bendall, is to use any waiting period actively rather than passively. Build financial resilience, reduce debt, strengthen savings – and when the time is right, enter the market from a position of genuine readiness.