How much Home Loan do I qualify for?
100% No Deposit Home Loans
South African Banks are constantly changing their lending policies.
100% Home Loans have returned & are available, but the banks are understandably more cautious when approving these bonds.
Read: How to secure 100% and 110% Bonds
The question of qualifying for a bond is one that most buyers ask. Let’s explore the factors that determine how much homeloan you’ll qualify for.
Monthly Income
As you may expect your monthly income is the single most important factor that determines how much you can borrow to purchase a property.
Banks and other South African Home Loan providers will only consider 30% of your monthly income as a bond repayment.
For example:
With a salary of R20k/pm, you can use a maximum of about R6 000/pm to pay-off a home loan. Although you can up this amount by applying jointly with you spouse, friend or family member.
Interest Rates
The current prime interest rate also plays a big role. The lower rates are, the bigger the bond amount will be!
Using our example of a R20k/pm salary, and a monthly bond repayment of R6 000:
If interest rates were at 10% you would qualify for a bond of about R600 000.
If rates were at 15.5% – R430 000
If rates were at 20.0% – R350 000
Loan Term
Although the most common loan term is 20 years, you can extend that term up to 30 years. A longer term would mean a smaller monthly repayment, and this would allow you to increase your total loan amount.
The Banks’ Lending Policy
Following the credit crunch the SA banks quickly removed their 100% homeloan offerings, but the property market has since turned and is showing signs of a good recovery. This has promoted many banks to begin offering full 100% Bonds again.
Some may even consider lending you a 110% Bond (if you earn less then 15k/pm). These 110% bonds will cover your deposit as well as your bond registration costs. Get a Home Loan – Apply Now!
Related Topics:
3 Keys to qualifying for a homeloan, plus 1 bonus
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No Deposit Home Loans
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Prime Interest Rate History
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February 27th, 2009 at 8:38 pm
Also remember, your credit rating can adversely affect how much you can borrow (if you can borrow at all). It also will determine the interest rate you receive. I’m not sure if they do credit checks here but often times they will.
February 28th, 2009 at 1:21 pm
@Jake Hogan That’s 100% correct. We definitely do process credit checks as this help us gauge how much our clients are able to qualify for in terms of a home loan.
November 22nd, 2009 at 12:07 pm
If I dont have a 100% credit record but my wife does, and we apply for a joint bond. Will it be turned down?
February 18th, 2010 at 1:14 pm
Hi A.Govender Thanks for the question.
Your credit record plays a vital role in the bond application process. If you choose to apply for the mortgage jointly, and one of you have a bad record, the banks will decline your application. You may consider applying individually, but you may only qualify for a small home loan.
April 15th, 2010 at 9:26 am
I want to buy a house, first time buyer, I need to know the a -z on how to go about it.
Thank you