Want to know how much bond your salary can qualify for, use our free bond estimator below to get your answers.
To determine how much bond you can afford for with your salary, lenders typically use a formula based on your gross monthly income and your debt-to-income ratio.
Here’s a general guideline:
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Debt-to-Income Ratio (DTI):
- Most lenders prefer your total monthly debt obligations (including the bond repayment) to be no more than 30-35% of your gross monthly income.
- If you have no other debt obligations, you could potentially allocate up to 30-35% of your salary toward bond repayments.
Calculation:
- 30% of R18,000:
18,000×0.30=R5,40018,000×0.30=R5,400 per month. - 35% of R18,000:
18,000×0.35=R6,30018,000×0.35=R6,300 per month.
This means you could afford bond repayments of R5,400 to R6,300 per month.
Bond Amount Estimate:
- The bond amount you qualify for depends on the interest rate and the loan term (usually 20-30 years).
- As of 2023, interest rates in South Africa are around 10-12% for home loans.
Using an online bond calculator or the formula for loan repayments, you can estimate the bond amount. For example:
- At 10% interest over 20 years, a monthly repayment of R5,400 would qualify you for a bond of approximately R600,000.
- At 12% interest over 20 years, the same repayment would qualify you for a bond of approximately R550,000.
Other Factors:
- Credit Score: A good credit score can improve your chances of qualifying for a higher bond amount.
- Deposit: A larger deposit reduces the bond amount needed and can improve your eligibility.
- Other Debts: If you have other debts (e.g., car loans, credit cards), your affordability will decrease.
Example Summary:
- Salary: R18,000
- Affordable Repayment: R5,400 – R6,300/month
- Estimated Bond Amount: R550,000 – R600,000 (depending on interest rate and loan term).
For a precise calculation, consult a financial advisor or use a bond calculator with current interest rates.
