The loan amount you can qualify for is limited by your monthly income and by your total disposable income. Only 30% of your income can be used to pay towards a home loan.
The National Credit Act has taken this one step further and banks are now required to ensure you have enough disposable income to support a bond repayment. Thus the way in which purchasers are assessed has changed.
To work out how much you qualify for:
Calculate 30% of your monthly income:
ie: R30 000.00 per month will be R10 000.00 – the bond amount would be limited to a maximum of R10 000.00. You will then have to list ALL your current expenses, including fuel, petrol, school fees, etc and prove that you can in fact actually afford to repay R10 000.00 per month back.
If after ALL expenses are deducted, you are only left with R6 000.00 then a bond with a repayment of R6 000.00 is all you will qualify for even though it is less than their 30%. Also remember that the bank looks at your credit record – do you pay your accounts on time? Are you black listed etc.
The good news is that if you are currently paying rent – this amount is added to your disposable income.