Home loans 101: understanding the basics

Buying a home is one of the most exciting milestones you will ever experience, but if the idea of a home loan makes your heart skip a beat, you are not alone. Our team of specialists at SA Home Loans understand that.

In this blog, we will unpack the fundamentals of home loans: what they are, how they work and what you need to know before applying. Whether you are a first-time buyer or simply refreshing your knowledge, this guide will help you feel informed and confident as you take the next step towards homeownership.

What is a home loan?

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A home loan (or bond) is a long-term loan used to finance the purchase of a residential property. In simple terms, it’s money borrowed from a lender to buy a home and, thereafter, repaid monthly over a set period, typically between 20 and 30 years.

Each monthly instalment covers both the principal amount (what you borrowed) and interest (the cost of borrowing). Over time, as you pay off more of your bond, a larger portion of your instalment goes toward reducing your principal balance.

With SA Home Loans, you can choose from a range of flexible products, like the 30-Year Home Loan, the Edge Home Loan designed for first-time buyers (for the lowest starting instalments) or for clients switching their bond from another lender.

How much can you borrow?

Your affordability determines how much you can borrow. Your total monthly repayments, including insurance, rates, and taxes, should not exceed 25% to 30% of your gross income. Lenders also look at:

• Your credit history and score
• Your employment stability and income
• The size of your deposit (if you have one)
• Existing financial commitments

At SA Home Loans, even if you do not have a large deposit, you may still qualify for a 100% home loan, making it possible to buy your first home sooner. Use our Affordability Calculator to get an estimate of what you can afford before applying.
 

Upfront costs to expect

Beyond your purchase price, buying a home comes with additional costs. These may include:

• Transfer duty (a government tax on property purchases)
• Attorney and registration fees
• Valuation and bond initiation fees
• Municipal rates and utilities

If you are short on funds for these upfront expenses, SA Home Loans offers Transfer Assist, providing access to up to R100 000 to help cover these costs. 

Why choose SA Home Loans?

Unlike traditional banks, SA Home Loans is a specialist home finance provider, meaning home loans are our sole focus. We pride ourselves on offering:

• Personalised service and support throughout your journey.
• Tailored products to suit diverse needs and life stages.
• Educational resources like Bond Talk to help you make informed financial decisions.

We have helped thousands of South Africans achieve their dream of homeownership, and we are here to help you do the same.
 

Next steps

If you are ready to begin your homeownership journey, get pre-approved, explore our home loan products or chat to one of our experienced consultants. Contact our team on 0860 2 4 6 8 10 or request a call back today.