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.