What is Home Loans?
A home loan is a secured loan that is obtained to purchase a property by offering it as collateral. Home loans offer high-value funding at economical interest rates and for long tenors. They are repaid through EMIs. After repayment, the property’s title is transferred back to the borrower.
Home Loans In South Africa
Below are top Home Loans in South Africa
A home loan is arguably the most important loan that a person will ever take out. Because home loans take a long time to repay, getting a home loan that works for you and your budget is crucial.
Taking into account loan terms can work in your favor, this will allow you to plan accordingly without getting over-indebted for the duration of the loan. Our top 8 Home loan compilation will help you learn about some of the best home loans available in South Africa.
Our top ten Home Loans picks are decided based on fees charged, the interest rate payable, the service fee, the deposit, and the company’s reputation. Please keep in mind that our picks are not in any particular order and are indexed based on Rateweb’s listing criteria.
Here are the top 8 Home Loans in South Africa:
Nedbank Home Loan
Nedbank has one of the best home loans offers in South Africa, with customers benefiting even before they pay their first installment. Clients can receive up to R15,000.00 in cash back on the loan value. The cashback is, however, limited to one percent of the loan amount.
Clients can also save up to 50% on the attorney bond registration fee when they apply for a home loan online. Customers can choose between mortgage refinancing and home loans from the bank.
Nedbank can finance up to 100% of the purchase price of a home. Furthermore, the interest rate on the client’s home loan is reduced by 0.25 percent and the reduction is applicable to clients who use Nedbank as their primary bank.
The monthly service fee at Nedbank is R69.00, and the home loan has an initiation fee of R6,037.00. The fee for cash deposits is R30.00 + R1.51 per R100.00 or part thereof.
Standard Bank Home Loan
The Standard Bank Home Loan has a repayment term of up to 20 years and a personalized interest rate. If your credit score and history are good, you may be able to get a lower interest rate when applying for a Standard Bank home loan.
Clients can obtain up to 100 % financing of the property’s purchase price. Customers who are approved for a Standard Bank Home loan must obtain homeowners insurance.
Loan approval is quick; clients can be approved on the same day they apply. Since there are no commission fees involved, applying directly online cuts out the middleman.
Standard Bank Home Loan has a monthly service fee of R69.00 and an initiation fee of R6,037.00.
SA Home Loans
SA Home Loans provides clients with home loans and refinancing loans. Clients can obtain home loans for a period of up to 30 years. Depending on the client’s credit history, they may be able to get the lending rate as their interest rate. SA Home Loans provides funding for a home of up to 100 % of the home’s value.
When government employees use SA Home loans to finance their homes, they receive preferential interest rates. They receive a 50% discount on bond attorney fees and can choose to pay interest only for the first three years after taking out the loan.
Absa Home Loan
Absa Home Loan includes an online management tool that allows clients to manage their repayments and access previously paid money. Clients can also choose between fixed and variable interest rates.
Absa provides home loans of up to 100 percent of the purchase price. Young professionals are given a boost with home loans of up to 105 percent of the purchase price. Those with a gross income of less than R26,100 receive assistance in applying for FLISP (financial linked Individual Subsidy Programme).
The cash deposit fee for the home loan account is R4.50 plus R1.50 per R100.00 deposited into the account. Account-holders must pay an R69.00 monthly service fee as well as an R6,037.50 initiation fee.
Want to apply for a home loan?
Grow your deposit first.
Before submitting your home loan application, grow your deposit for better interest rates.
Despite South Africa’s tough economic climate, 2018 has seen an increase in the number of people applying for home loans. This is according to a new report released by the National Credit Regulator (NCR).
It is true that many banks now offer 100% home loans which don’t require a deposit, but remember the bigger your deposit, the smaller your home loan repayments will be. By reducing the amount you need in a bond loan, you are also reducing the amount of home loan interest you pay on the purchase. While African Bank doesn’t offer home loans, we do offer a range of saving and investment products that could help you save towards a deposit for your new home.
Look at these two examples:
- If you take a mortgage for R890, 000 with 0% deposit at 10.25%, your monthly repayment would be R8737. The total repayment at the end of the 20 year term would be R2, 096,880.
- If you take a mortgage for the same amount but with a 10% deposit, your monthly repayment would be R7863 and the total repayment at the end of the 20-year term would be R1, 887,120.
Click here to view an infographic that breaks it down for you. It’s clear to see that growing a deposit is a good way to save in the long run!
Having a deposit will also improve your chances of having your home loan application approved and will put you in a better position to negotiate a more favourable interest rate.
Home loan deposit options
It’s important to do your research into the right savings and investment option for your goal. Look at timeframes and find out about interest rates, notice periods, tax-free returns and so on. Don’t be afraid to ask for advice and find what works for you. Having your own home is very rewarding, but making sure the repayments don’t cripple you financially is key.
Here, we break down African Bank’s Savings and Investment products, so you can choose the best option to help you save for your deposit. With African Bank currently offering SA’s Best Interest Rate, these options will help you grow your money:
Fixed Deposit: Invest a lump sum for a fixed term of three to 60 months. This investment offers guaranteed returns with fixed interest rate for the duration of the investment.
Notice Deposit: With this Investment you can grow your money with extra deposits from as little as R100. Choose your notice of withdrawal for either 7, 32 or 90 days.
Access Accumulator: This investment is unique to the South African market, allowing you to earn market leading interest rates that increase monthly over a maximum term of 24 months. You have the flexibility to withdraw at any time. No notice period, no penalty.
Tax-Free Investment: With a minimum deposit of R100, you deposit up to R33 000 each year, without being taxed on your earnings from this investment. An added bonus is that while your original interest rate will never drop, you can benefit if the interest rate increases.
It takes minutes to open an investment account online, including the option to upload all your documents – no need to go into a bank. Click here to open your African Bank investment account today.
Additional factors to consider when applying for a home loan
Decide whether or not to apply for a 30-year or 20-year home loan. You will end up paying much more on a 30-year term home loan, but the monthly repayments might be more manageable.
Know what you’re in for. Many of South Africa’s property websites have a bond calculator – use this handy tool to get an idea of monthly bond repayments.
Be honest when declaring your monthly expenses in your bond application. Banks may be tending towards leniency, but they’re far from reckless. Honestly declaring your monthly expenses illustrates your ability to service a loan.
What do I need to qualify for a home loan in South Africa?
In order to qualify, you must:
have a household income that falls between R3,501 and R22,000 per month.
be a South African citizen over the age of 18.
be either married, cohabiting, or single with at least one dependent.
not have benefited from a previous government housing programme or subsidy.
Is it hard to get a home loan in South Africa?
Interest-only mortgage
However, it’s become more difficult to take out this kind of mortgage since the 2008 financial crash. Not all South African banks will offer an interest-only mortgage and it’s the most difficult one to apply for.
How much home loan can I get if my salary is 30000?
How much home loan can I get on my salary?
| Net monthly income | Home loan amount |
|---|---|
| Rs. 25,000 | Rs. 20,85,328 |
| Rs. 30,000 | Rs. 25,02,394 |
| Rs. 35,000 | Rs. 29,19,460 |
| Rs. 40,000 | Rs. 33,36,525 |