31 Jul 2018
Buying a new home is quite an exciting commitment to make: what an exhilarating moment it is when you feel you can finally start looking around for a property of your own! A home is so much more than just a roof over your head. It’s part of your legacy – something tangible to invest in, which can benefit both you and your family, well into your old age.
That said, it’s good to remember that the best home to buy right now is the one you can actually afford. In the property world, affordability is calculated by subtracting your monthly expenses from your combined household income. Saving towards a sizeable deposit on a home is one way to decrease your monthly home loan repayments, which is why your deposit amount is also used to calculate your affordability.
It’s wise to calculate your affordability before applying for a home and looking at a property to buy. Firstly, you’ll want to have a good idea of the properties you can afford and the size of the home loan you’ll be able to apply for and then manage over the life of your home loan.
Estate agents often ask their clients to do an affordability check before they spend time taking them around to view prospective properties. Agents want to know their clients’ affordability so they don’t waste time showing them homes they can’t actually afford to buy.
Another good reason for doing an affordability check is because all financial lenders use their own affordability calculations to determine the home loan amount they can legally offer home loan applicants.
According to the South African National Credit Act, no financial lender is allowed to loan an amount that would leave a client with a monthly bond repayment of more than 30% of their combined household income. This means that, as a dedicated home loan provider, SA Home Loans isn’t legally permitted to provide credit to someone who can’t actually afford it.
We are obligated to ensure you’ll have enough money left over to cover your additional living expenses after paying your monthly instalment on your home loan. This is why we recommend you do a credit check and calculate your affordability before you apply for a home loan with us – to avoid disappointment at having your home loan application rejected due to affordability issues.
Prospective home buyers can use our online home loan affordability calculator to run their calculations and determine the size of the bond they can actually afford with us.
Click on the home loan affordability calculator button below and run a quick calculation to work out your affordability.