What can I afford?
Start from the cash you have and what you earn. See the most expensive property you could sign for — with the bond, deposit and every fee due at signing.
For the deposit and the costs at signing.
Before tax. Add your partner’s if you are applying together.
Other bonds, vehicle finance, loans, card minimums.
Optional. Banks count part of the rent an investment property will earn as income.
Banks often ask for at least 10% deposit on an investment property. The rate starts at today’s prime (10.75%).
Your cash sets the limit. A bank would lend up to R2 511 749, but at a 10% deposit your cash runs out here. Every extra R10 000 of cash adds about R43 000 to the price.
- Bond
- R2 147 400
- Deposit
- R238 600
- Fees at signing
- R161 164
- Repayment
- R21 801/m
Cash used: R399 764 of R400 000.
| Price | Bond | Cash needed | Repayment |
|---|---|---|---|
| R1 670 000 | R1 503 000 | R268 102 | R15 259 |
| R2 020 000 | R1 818 000 | R334 524 | R18 457 |
| R2 386 000 | R2 147 400 | R399 764 | R21 801 |
A cheaper property leaves cash in reserve — for vacancy, repairs and a rate rise.
At R2 386 000, the property would need to rent for about R29 026 a month to pay for itself from day one — a gross yield of 14.6%. Compare that with the rents of similar homes before you offer.
Levy, rates, insurance, maintenance.
R2 511 000
The bank lends the whole price. You still need about R178 478 in cash for transfer duty, conveyancing and bond costs. Repayment R25 492/m.
R2 348 000
No cash at all: a bond of R2 511 000 (107% of the price) pays the price and R163 000 of costs. Repayment R25 492/m.
Banks decide case by case. A 100% bond usually needs a strong credit record; a bond that also covers the costs (up to about 108% of the price) is offered mostly to first-time buyers of a home they will live in, and rarely on an investment property or to a company or trust. Borrowing everything also means a bigger repayment for the rent to cover.
Bond assessment
Bond pre-approval through GoFund opens soon. Until then, nothing you enter in IQprop is sent to GoFund, and you are free to use any bank or originator.