Standard Style 25 May 2014 - 31 May 2014

20 THE STANDARD STYLE / FAMILY / INVESTMENTS
May 25 to 31 2014
Savings & Investments
Saving to Buy a House
The prevailing economic situation in
Zimbabwe has made it difficult for
banks to give mortgages for the purchase
of real estate. Only a few banks
have this facility and there is immense
competition to secure a mortgage. This has
necessitated the need for prospective house
buyers to find alternative methods to raise
funds apart from borrowing. One of the options
open to prospective home buyers is
saving towards the purchase of a house.
Buying a house is exciting and lifechanging.
What’s not as much fun is saving
for the deposit. But the more money
you put down upfront, the less you’ll have
to borrow. There are many ways to save for
a home that don’t require major changes
to your lifestyle. With a good savings plan
and some discipline, you’ll soon have the
deposit for your home sweet home. Find a
bank that will give you interest on your savings.
NMB has the NMB Save Plan which
not only allows you to put money away but
also earn interest on it.
How much do you need to save?
To get an idea of property prices in the area
you want to buy, go to auctions or research
property prices from the newspapers and
online classifieds. The property market is
always changing so it’s important to know
how much you should spend on a property
in the area you like.
Work out what you can afford
Work out how much you can afford to spend
on a deposit and your mortgage repayments.
Use the mortgage calculator to figure
out how much your monthly repayments
will be. Consider buying a cheaper
house if it means your repayments will be
easier.
Smart tip
Aim to save a deposit of 50% or more of the
purchase price of your house. One of CBZ’s
products is the Cash Plus Housing Savings
Account. If you save 50% or more with
them towards the purchase or construction
price of your home, CBZ provides the other
50% in the form of a mortgage loan.
Cut back on the extras
The easiest way to see where you can cut
back is by doing a budget. Write down your
essential costs, such as rent, bills and food,
and subtract this amount from your income
(after tax). What is left over is what
you could potentially save for your deposit.
Try to spend as little as possible on
non-essential items and put away all your
spare money for the deposit. Give yourself
some leeway - if your budget is too tight, it
is harder to reach your target. So don’t cut
out all your non-essential expenses. A good
idea is to set smaller savings goals along the
way and reward yourself when you achieve
them.
Make the most of what you save
Once you have worked out how much you
can save, make your money work for you. If
you leave it in your everyday transaction
account, you might be tempted to use the
cash. You will also earn less interest than
you would with other accounts or options.
Are you ready to buy?
You are ready to become a homeowner if
you have the following things in place:
A substantial deposit - The bigger the
better when you’re saving for a home. (As
a rough guide, aim to save 50% of the purchase
price plus enough to cover costs.)
A regular savings habit - A solid track
record of employment and a history of
regular savings in your bank account will
make it easier for you to get a home loan.
Pre-approval for a loan - Compare a
few different loans before you decide. Ask
your lender for a key facts sheet on each
home loan so you can compare more easily.
Once you pick the loan you’ll know what
the repayments will be and how much you
can afford to spend on a property.
Some additional savings - These will
act as a buffer if interest rates rise and
your repayments increase.