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.
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.
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.
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
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 prompted 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!
Do you have a question or Need more assistance?