What do I need to afford a mortgage?

2012-03-24 08:47

Senatla writes:
Iwould like to know what bond I would qualify for given that I have saved R100 000 as a deposit and have a net salary of R12 000. I’m looking for a house of between R500 000 and R700 000.

Maya replies:
It is great that you have saved up a significant deposit. Not only will this make the loan more affordable but it will also make it easier to qualify for a home loan at a good rate.

Marius Marais, CEO of FNB Housing Finance says on a R12 000 income you will be able to service a maximum basic repayment of around R4 500 (assuming prime of 9%). This assumes that after all your other expenses you have R4 500 available.

Marais says you need to also consider that you would need to take out home owners cover and life cover premiums which will add another R500 of costs, so the amount available for the home loan is only R4 000 per month.

Based on this scenario a bank can provide you with a loan of around R400 000, so utilising your deposit the maximum house you could afford would be R500 000.

A good strategy would be to speak to your bank first so you are sure what you can afford before looking to buy.

Also shop around and speak to other banks or a mortgage originator like ooba who can compare quotes for you.

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