Why a big deposit makes sense
Category News
You will often hear property experts say that a property is the best investment that you can make, especially if it is your primary home.
The reason for this, is that unlike other asset classes, property has an inherent value that lies in the land and bricks and mortar. In other words, provided no disaster befalls your property, it should at the very least retain its value and grow in value.
When it comes to buying property, you will also often hear property experts recommend that you put down a deposit as big as you possibly can. The reason for this, is to invest some cash upfront to create security.
Properties are often sold for close to or even higher than the current market value and it takes about five years to start accumulating value.
The first two years can be financially challenging and by having some cash invested in the property, you can create a financial buffer in the event of some financial difficulty.
Putting down a deposit will also be seen favourably by the banks who will be more inclined to grant a bond as they know that you are serious about investing in your property.
Having some cash invested in your home upfront also means that you already have some positive equity in your property. It is for this reason that property experts also usually encourage home owners to invest spare cash into their bonds to bring down the loan amount while simultaneously lifting the equity value available and creating more financial security.
As soon as you are able to, you should start saving for your deposit.
This habit of saving will stand you in good stead once your property is transferred and your bond repayments start kicking in as you will be so used to setting aside money each month. Saving should also not stop there, but you should continue the habit to ensure you always have extra funds for the necessary maintenance and upkeep of your property. You may also want to make some improvements at a later stage.
Author: Seeff
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