"Many buyers take the view," says Rudi Botha, CEO of mortgage originator PA BetterBond, "that they would rather put the cash they would have used for a deposit towards the transaction costs and buy a more expensive property with a 100 percent loan.

"Others might just prefer to keep the cash for moving expenses, or new appliances, or perhaps immediate renovations to their new home, and it has certainly not been difficult to obtain 100 percent or no-deposit loans in recent years.

"In fact, a very large percentage of the loans we obtained for buyers over the past three years have been for 100 percent or more of the purchase price ? 108 percent loans having been available to first time buyers to include the transaction costs."

And, he notes, there has been little risk in this, because property prices generally were rising so fast that buyers were able to quickly build up equity in their homes and lower the loan-to-value ratio.

Growth slowing, rates rising
"Now, however, the rate of price growth has slowed, and it may be time for buyers to have a serious rethink about 100 percent loans ? especially in the light of the fact that interest rate increases are expected in the new year."

Slower appreciation may not be a problem for the 100 percent buyer planning a long-term stay, Botha explains, but for those who need to sell again soon ? because of a sudden job change, for example ? adding selling costs and agent's commission to the loan repayment can create a 'negative equity' situation in which they actually owe more than their property is worth.

"And that will of course negatively affect their prospects of obtaining their next loan and buying another home."

In addition, says Botha, all home buyers should now be keeping an eye on interest rates ? and trying to give themselves some leeway in the event of rate increases next year by reducing the capital amount they borrow.