FNB: Home deposit should be a priority
First National Bank of Namibia (FNB) has committed itself to ensure many Namibians desiring a home can now buy or build their own by offering alternatives to affordable means of home-owning.
The head of home loans, Thomas Slabbert emphasises the best investment a customer can make is buying property, as it does not only give security from eviction but also lets one reap positively from the investment.
As the main workable alternative, FNB Namibia advices putting down a deposit may greatly benefit a home buyer, as people who save are seen as a low risk customers by the banks, says Slabbert.
“Since a home is a person’s biggest asset, Namibians should use it to their advantage by creating wealth for themselves. This will materialise as soon as one considers buying property and therefore saving for a deposit,” says Slabbert.
First-time buyers, Slabbert adds, are the least likely to put down a deposit and their numbers are increasing in prominence. The FNB 2013 Estate Agent Survey has revealed in all the buyers, 22% are the first-time buyers.
Even though depositing after registration lowers capital and reduces the amount of interest charged to the bond, it may not be an effective way.
Any amount for a deposit can work starting from as low as 5%, if 10% to 20% is too high for a customer to afford, that is.
“Paying as little as a 10% additional payment per month into one’s bond could help them save approximately four and a half years of repayments and N$368 000 in interest on a N$1m loan over the loan’s lifespan. These calculations have been based on the current level of interest rates. The additional repayment is immediately a set-off against the capital value of the loan, thereby reducing interest paid and saving a customer in the long-term.”
Buying property also involves many other costs that customers need to consider like transfer duty, registration and initiation fees.
“New homeowners need to realise owning a home can be expensive in different ways. Rates, taxes and general maintenance fees on a larger freestanding house add up quickly and can sometimes end up getting to the point where it is no longer affordable,” warns Slabbert.