Frequently Asked Questions

Banks assess your net disposable income (NDI) — your take-home pay minus existing monthly debt obligations. Most lenders will allow up to 30% of your net income for a bond repayment, though some apply the ratio to gross income. They also look at your credit score, employment stability, and the property value. This calculator uses the NCA (National Credit Act) 30% guideline against net income, which is the conservative benchmark.

Your final interest rate depends on your credit profile. The 'most likely' scenario assumes you'll pay prime + your chosen margin (default 0.5%). 'Best case' assumes you negotiate prime − 0.25% — achievable with an excellent credit score and a low loan-to-value ratio. 'Worst case' applies prime + 1%, which banks charge borrowers with weaker profiles or high loan-to-value ratios. Knowing all three helps you budget conservatively and negotiate confidently.

No — 100% bonds (zero deposit) are available in South Africa, though they are harder to qualify for and attract a higher interest rate. A 10% deposit meaningfully improves your rate and reduces the total interest you pay over the loan term. First-time buyers who qualify for FLISP (Finance Linked Individual Subsidy Programme) can use the government subsidy as part or all of their deposit.

The National Credit Act requires lenders to assess whether you can afford a loan based on your actual income and expenses. The standard benchmark is that your total monthly debt repayments — including the proposed bond — should not exceed 30% of your net (after-tax) monthly income. Some banks stretch this to 35% of gross income. This calculator defaults to 30% of net income; you can adjust it in the advanced settings.

Yes, significantly. A score above 680 typically qualifies you for prime or better. Scores between 600–680 may still be approved but at prime + 1% or higher. Below 600, most banks will decline or refer you to a higher-cost lender. Checking and improving your credit score before applying — by paying accounts on time, reducing credit card balances, and avoiding new credit applications — is one of the most effective ways to increase your qualifying amount.

Beyond your deposit, budget for: transfer duty (payable to SARS on properties above R1,100,000), transfer attorney fees (conveyancer appointed by the seller's bank), bond registration fees (conveyancer appointed by your bank), and the bank's initiation fee (typically R6,900). Total upfront costs on a R1.5 million property are roughly R75,000–R110,000 depending on your bond size. Use the Bond Cost Calculator on this site for an exact estimate.

The prime lending rate is the benchmark rate set by the South African Reserve Bank (SARB) and currently sits at 10.25%. Your actual bond rate is prime plus or minus a margin negotiated with your bank. A first-time buyer might pay prime + 0.5% to + 2% depending on their credit profile and deposit size. A strong credit score and a 10–20% deposit can get you to prime flat or even below.

Interest compounds over a long loan term — small rate differences become enormous in absolute terms. On a R1.5 million bond over 20 years, the difference between best case (prime − 0.25%) and worst case (prime + 1%) is roughly R150,000–R200,000 in total interest paid. This is why negotiating your rate — or using a bond originator to negotiate on your behalf — is worth the effort.

Each monthly payment covers two things: interest on the outstanding balance, and principal reduction (paying down the loan). In the early years, most of your repayment goes to interest. As the balance falls, a growing portion reduces the principal. This is why extra payments made early in the loan term save disproportionately more than the same payments made later.

Not directly — the monthly repayment is calculated at signing for the full term. However, if the SARB cuts the prime rate, your repayment falls automatically (since most SA bonds are variable-rate). You can also refinance (switch your bond) to a lower rate if your credit profile has improved significantly since you originally borrowed. A bond originator can assist with a rate switch.

A shorter term (e.g. 15 years vs 20 years) results in a higher monthly repayment but substantially less total interest paid. A 15-year bond on R1.5 million at 10.75% costs roughly R350,000 less in interest than a 20-year bond — but the monthly repayment is about R3,500 higher. The right term depends on your cashflow. A middle path: take a 20-year term for flexibility, but pay as if it were 15 years using the extra payment calculator.

Yes — significantly. Every rand of extra payment reduces your outstanding balance immediately, which means less interest accrues the following month. Because interest is calculated on the remaining balance, the savings compound over time. An extra R1,000 per month on a R1.5 million bond at 10.75% saves over R200,000 in interest and cuts nearly 4 years off a 20-year term.

Both — in order. Your standard monthly repayment first covers the interest due for that month; anything above that reduces the principal. When you pay extra, the full extra amount goes directly to principal reduction, since the interest for that month is already covered by your standard repayment. This is why extra payments are so effective: you are reducing the balance that future interest is charged against.

No. Under the National Credit Act, South African banks cannot charge an early settlement penalty on home loans. You can pay as much extra as you like, as frequently as you like, with no penalty. Some banks do charge a bond cancellation fee (around R3,000–R5,000) if you close the account entirely, but this is the cost of deregistration, not a penalty for paying off early.

This depends on your after-tax investment return vs your bond interest rate. Your bond rate is typically 10.5–11.5%. To beat that with investments you'd need a consistent after-tax return above your bond rate — which is achievable in equities long term but not guaranteed short term. Many financial advisors recommend a hybrid approach: max out your tax-free savings account (TFSA, R36,000 annual limit) first, then direct any surplus to extra bond payments.

Yes. Any lump sum paid into your bond account (tax refund, bonus, inheritance) reduces your balance immediately and generates the same compounding interest savings as equivalent monthly extra payments. This calculator models a fixed monthly extra amount, but lump sum payments work the same way — the savings shown are directionally correct. Your bank's online platform typically allows ad-hoc additional payments at any time.

If your bond is an access bond (sometimes called a revolving credit facility — offered by Standard Bank, Nedbank, and others), extra payments reduce your balance but the paid-up portion remains available for you to redraw. This gives flexibility but also temptation. If you want extra payments to actually shorten your loan term, use a standard home loan without access facility, or treat the access bond's available balance as off-limits.

The buyer pays transfer duty to SARS (South African Revenue Service). It is a progressive tax on the purchase price of a property. Properties priced at or below R1,100,000 are exempt. Above that threshold, rates range from 3% to 13% depending on the purchase price bracket. Transfer duty is not charged on new developments where VAT has already been applied by the developer.

No — they are mutually exclusive. Transfer duty applies to second-hand (resale) properties where the seller is not a VAT vendor. VAT at 15% applies to new developments sold by a VAT-registered developer. You pay one or the other, never both. If you are buying from a developer and see '+ VAT' in the listing price, no transfer duty applies. If the listing is a resale, transfer duty applies (unless the purchase price is below R1,100,000).

The bond registration fee is paid to the conveyancing attorney appointed by your bank to register the mortgage bond in the Deeds Office. The tariff is set by the Law Society of South Africa and is based on the bond amount (not the purchase price). It is not negotiable — all attorneys charge the same regulated fee. The fee shown in this calculator reflects the current Law Society tariff scale.

There are two separate conveyancing attorneys in a property transaction: the transfer attorney (appointed by the seller's bank or the seller) handles the transfer of ownership, and the bond registration attorney (appointed by your bank) registers the mortgage. Both charge separately. The transfer fee is paid to transfer ownership to your name in the Deeds Office; the bond registration fee is paid to register the bank's security interest over the property. Both are regulated by the same Law Society tariff scale.

No. Transfer attorney fees and bond registration fees are set by the Law Society of South Africa tariff and are not negotiable. The attorneys are appointed by the banks (not by you), so you cannot choose a cheaper attorney for the bank's registration. You can, however, use a bond originator to negotiate your bond interest rate, which will save far more over the loan term than any fee negotiation.

Yes. All upfront costs — transfer duty (paid to SARS via the transfer attorney), transfer fees, and bond registration fees — must be paid before the Deeds Office will register the transfer. Your bank typically requires proof of payment before they disburse the loan. The transfer attorney will give you a 'statement of account' showing exactly what is due. Budget for these costs to be settled within 30–60 days of signing the offer to purchase.