How much Home Loan do I qualify for?

Nov 25, 2008

This is a question that most buyers would ask. Let’s explore the factors that determine how much homeloan you’ll qualify for.

1. Your Income 3. Loan Term
2. Interest Rates 4. and The Banks’ lending policy

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
Home loan providers are no longer offering 100% home loans. Previously, new home owners were even able to secure 108% bonds – to cover the full purchase price and the costs involved in registering the loan.

Home Loan Tools:
Apply Online
Bond Calculator
Prime Interest Rate History

Do you have a question or Need more assistance?

For more assistance with regards to applying for Home Loan finance contact one of our consultants.
Email: olen@propertyloans.co.za
Ph: 0861 111 563
or Complete This Request Form Online

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4 Comments For This Post

Jake Hogan Says:
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.

Bond Originator South Africa Says:
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.

A.Govender Says:
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?

Bond Originator South Africa Says:
February 18th, 2010 at 1:14 pm

@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.

Jake Hogan Says:
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.
Bond Originator South Africa Says:
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.
A.Govender Says:
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?
Bond Originator South Africa Says:
February 18th, 2010 at 1:14 pm
@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.

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