We all hopefully go through the ropes to buy our first home at some point in time in our lives. And to most, this is a daunting experience considering the costs involved.
If you can pay a deposit upfront, this will help tremendously to lessen the expenses. Not only does paying a deposit upfront help by lowering your monthly repayment, but it will also increase your chances of getting the loan in the first place.
Over time financial institutions have tried to make it easier for first-time buyers to enter the market by providing them with a 100% home loan, meaning that they do not have to give any deposit.
Also, keep in mind that some selling will require the buyer to pay a deposit. This will be stipulated in the offer to purchase to provide the seller with more security. Buyers need to read the offer to purchase thoroughly to make sure they are not caught off guard by this requirement. This could lead to the sale not going through until this deposit gets paid.
Even if no deposit needs to be paid, you should remember that there are always bond and transfer costs involved and this needs to be paid upfront. This amount could easily be compared to 10% of the asking price.
Apart from this, buyers should consider that providing a deposit will show both the seller and lender that they are serious about buying the property and can afford the purchase. This not only improves your chances of having your home loan application approved, but it can also lead to a possible lower interest rate on your home loan as previously mentioned.
Various experts in the field recommend to first-time buyers that 10% to 20% of the asking price is usually a good amount to put down as the initial deposit. The more your deposit is, the less you need to borrow from the brand and the lower your monthly instalments will be, as simple as that.
How does it work?
- Once you have agreed to an amount, the deposit is not paid directly to the seller but rather to the transferring attorney.
- The deposit will then be placed into a trust account where it will be kept safe until the property transfer and registration is completed by the transferring attorney.
- The interest generated by the deposit will be paid to you after the registration of the property.
What if the sale does not go through?
Then there are various possible outcomes for what will happen to your deposit. If your offer to purchase was contingent on your home loan approval, and for whatever reason, your bond was not approved, your deposit will be refunded to you. However, if you withdraw your application, then you could be in breach of the contract, and you might forfeit your deposit.
Tip: Make sure your deposit is refundable!
Some readers might not be first-time buyers but have read till here to refresh their memory on the topic. You might have sold your property and want to put down your deposit on your next one. And you are most likely waiting for your money to reflect on your side before you can afford the next deposit. That is where Property Bridging Finance comes to the rescue. QuickBridge will provide sellers with the capital to afford their next property deposit.
In this scenario (and many others), time is money. With QuickBridge you can forget about waiting and rather receive your money, earlier.
Visit QuickBridge for more information.