How do South African banks decide what bond I qualify for?

SA banks use the 30%-of-gross rule: your monthly bond repayment (plus the small NCA admin fee) cannot exceed 30% of your gross monthly income, less any existing debt repayments. They also look at your credit score, employment history, and the loan-to-value ratio of the property. This calculator applies the 30% rule and then back-solves for the maximum loan amount at the rate and term you choose.

Why does my existing debt reduce what I qualify for?

The 30% rule is applied to your total monthly debt service, not just the bond. So if you have a R3,000/m car payment and earn R30,000/m gross, your 30% ceiling is R9,000 — but R3,000 of that is already taken by the car, leaving you R6,000 for the bond. Banks call this the debt service ratio. Paying down expensive consumer debt before applying for a bond is one of the highest-leverage moves you can make.

What is the SARS transfer duty and when does it apply?

Transfer duty is a tax SARS charges on the purchase of immovable property valued above R1,210,000 (for the 2026/27 tax year). It is paid by the buyer in cash and is NOT financed into the bond. The rate is progressive: properties between R1.21m and R1.66m pay 3% on the portion above R1.21m, rising to 13% on amounts above R13.31m. Properties below R1.21m are duty-free, which is why this threshold is a sweet spot for first-time buyers.

What is the bond initiation fee and is it included in my bond?

The initiation fee is a once-off charge banks levy under the National Credit Act. It is capped at R6,037.50 (1.20% inclusive of VAT). Banks usually add it to your bond — meaning you do not need cash for it upfront, but you will pay interest on it for the life of the bond. The R69/m monthly admin fee is also NCA-regulated and is included in your monthly repayment commitment.

What about transfer attorney and bond registration costs?

Two separate sets of fees apply: the transferring attorney (paid by the buyer) handles the property transfer at the Deeds Office, and the bond attorney (also paid by the buyer) registers the bond. Together these can run from about R18,000 on a R500k property to R75,000+ on properties above R3m. These are paid in cash before transfer — they are not financed by the bond.

Why does the calculator show a "true monthly cost" higher than the bond?

Owning property is more than just the bond. You also pay homeowners insurance (legally required by your bond holder, roughly R250/m per million of property value), monthly municipal rates (about R1,000/m per million in most metros), the NCA admin fee, and a realistic maintenance budget (about 1% of property value per year). These can add 30–50% on top of the bond repayment. Most first-time buyers underestimate this and end up cash-strapped.

Should I take a 20-year or 30-year bond?

A 30-year bond lowers your monthly repayment but you pay dramatically more interest over the life of the loan. On a R1m bond at 11.25%, the difference between 20 and 30 years is roughly R400k+ in extra interest. The classic SA play is to take the 20-year bond if you can afford it; if you must take 30 to qualify, treat the difference as your "extra payment" target — pay the 20-year amount whenever you can.

How much can a small extra payment really save me?

Even an extra R500/m on a 20-year R1m bond at 11.25% can shave roughly 3 years off the term and save in the region of R200,000 in interest. The reason is that early in the bond, almost the entire repayment is interest — extra payments go straight to principal, which then stops accruing future interest. The earlier in the bond you start, the bigger the impact.

Should I put my savings into the bond or invest it elsewhere?

Mathematically, paying extra into a bond gives you a guaranteed risk-free after-tax return equal to your bond rate (around 11% currently). To beat that with investments, you would need consistent pre-tax returns above 13–15%, which is not guaranteed. That said, an emergency fund, a TFSA, and matched employer retirement contributions usually beat extra bond payments. The honest answer: top up emergency cash + TFSA + RA matching first, then funnel everything else into the bond.

What deposit should I aim for?

A 10% deposit is the SA bank baseline — under 10% you usually get a worse interest rate and may struggle to qualify. 20% is a common sweet spot: better rate, lower repayment, and you avoid being underwater if property prices dip. 100% bonds (no deposit) are available but typically come with higher interest rates and stricter lending criteria. The bigger your deposit, the more property you can buy for the same monthly repayment.

What is the FLISP / first-home-buyer subsidy?

The First Home Finance (formerly FLISP) subsidy is a government grant of up to R169,265 for South African first-time buyers earning between R3,501 and R22,000 per month (2024 thresholds — check current values). The subsidy is paid into your bond as a deposit, lowering your repayment. It applies to homes priced up to R600,000–R650,000 in most provinces. This calculator does not factor it in automatically — talk to a NHFC-accredited broker if you might qualify.

Can I rely on this to get pre-approved by a bank?

No. This is an estimator for planning purposes. Real bank affordability assessments include credit checks, employment verification, statement analysis, and bank-specific affordability buffers. The actual bond you qualify for can be 10–30% lower or higher than the calculator depending on your credit profile. Get a free bond pre-approval from a service like ooba or BetterBond before you start house-hunting seriously.

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