How to buy a house without a deposit in SA

Article summary

• A 100% home loan enables you to fund a home purchase without having to put up a deposit.
• Banks are eager to cater to first-time home buyers with their 100% home loan deals.
• Applying to multiple banks via a home loan comparison service grants you the best chance of obtaining a 100% home loan.

A deposit requires a significant amount of money (usually 10% of the purchase price) to be put upfront, and for many home buyers, especially first-time and younger buyers, it can be difficult to scrape together the necessary funds.

Thankfully there are options for those unable to afford a deposit.

The 100% home loan

Believe it or not, you have the option to obtain a home loan without it requiring a deposit. This is sometimes referred to as a 100% home loan, or zero-deposit home loan.

And if you decide to apply for a 100% home loan, you’re not alone. According to Kay Geldenhuys at ooba Home Loans, South Africa’s largest home loan comparison service, “60% of all the applications received by ooba Home Loans are from buyers who have no access to a deposit”.

What are my chances of having a 100% home loan approved?

According to Geldenhuys, four out of five applicants for a 100% home loan are approved. Banks are eager to cater to first-time home buyers, especially the younger market.

The downside of the 100% home loan

The bank is taking a greater risk by funding the whole purchase price, so are less likely to grant you a favourable interest rate. The 100% home loan will get you a home quicker by removing the need to save for a deposit, but will cost you more in the long-term because of the higher interest rate.

So while the ideal option is to show your commitment to the purchase by putting down a deposit, it’s nice to know you have the option of securing a home without having to make a significant investment upfront.

Increase your chances of obtaining a 100% home loan

Banks have different lending criteria, and some may be more willing to grant a 100% home loan than others. Your best bet is to apply to all the banks, which you can do through a home loan comparison service such as ooba Home Loans. They will submit your application to multiple banks, so you can compare deals and choose the one that best suits your requirements.

ooba Home Loans also offers a range of tools that can make the home buying process easier. Start with their Bond Calculator, then use the ooba Home Loans Bond Indicator to determine what you can afford. Finally, when you’re ready, you can apply for a home loan.