Home loans or mortgage loans are used to finance the purchase of a property. In South Africa we also refer to mortgage loans as a bond.
Features of a home loan:
- Security provided by the property being financed
- Used to finance property
- Interest rate determined by your credit score and ability to pay
- Term usually structured over 20 or 30 years
- In most cases it is preferable to have a deposit
Advantages of a home Loan
- Cheaper than other forms of finance as there is collateral in the form of the property
- You are financing an appreciating asset
Disadvantages of a home Loan
- In South Africa it is becoming increasingly more difficult to qualify for a home loan
- In the event of you defaulting on your home loan , the bank can take legal steps resulting in you losing your home.
- A home loan is a long term commitment so you need to be sure that the property you are buying is right for you and your family.
- Property rights are becoming less secure in South Africa as government is in the process of facilitating Expropriation Without Compensation.
How To Qualify for a Home Loan?
The different banks have vary qualifying criteria, however the details below are fairly common:
- Over 18 years old
- Permanently employed
- Credit clear and qualify in terms of the providers credit criteria
- Be able to provide a deposit in most instance – usually 10% of the purchase price
- Banks may also require that you have life insurance to cover the loan amount
To see if you qualify for a home loan – check out our affordability calculator here.
To see what your monthly mortgage repayment will be – check out our home loan repayment calculator here.