How to Qualify for a Home Loan in South Africa


As a result, many people believe that purchasing a home is out of their reach. In the meanwhile, there are a variety of options for you to consider when it comes to getting into the housing market, so don’t worry if this is your first time in the market.

Home Loan in South Africa

The best way to pay for a house is through a mortgage loan

To begin, you should know why you’re taking out a home loan in the first place. Lenders, mainly banks, will finance your property purchase instead of you paying the full amount up front. There is a term for the loan they give you to buy a home: a mortgage.

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Your house loan will be repaid in installments over a specified length of time. The bank holds on to the property’s title deed until you’ve repaid the loan in full.

You’ll also have to pay interest on top of the principal if you take out a home loan. The interest rate on your house loan decides how much additional money you’ll have to pay each month in addition to the monthly payment on your home loan itself.

It is essential to secure a loan to buy a property since it provides you with the money you need to do so.

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The best way to increase your chances of getting a mortgage

To ease your fears, you should know that first-time homebuyers can take advantage of special loan programs.

In the case of a 100% home loan,

Ten percent of the buying price is typically required as a down payment on a house. A down payment is more difficult to come up with for first-time house purchasers.

Many lenders are offering 100% home loans, which do not require a down payment, in an effort to get younger homebuyers to apply.

An upfront payment of large sums of money is not required when you take out an all-inclusive home loan, which means you can afford your new home entirely through your monthly mortgage payments.

As supply currently outstrips demand, more and more banks are offering 100% house loans in order to entice first-time home buyers and strengthen the market.

How to secure financial backing from another person

A guarantor might help you get a home loan if your own salary isn’t enough to get you approved for one. There are certain banks that will accept a surety from a third party, but only if the individual signing the surety has a direct interest in the property, such as a child who lives on the property.

Making use of a site that compares mortgages

Making repeated loan applications will increase your chances of getting a mortgage. Getting a house loan from one lender could be easier than getting one from another, and some lenders may even offer better terms, including lower interest rates.

For this reason, consider using a home loan comparison service like ooba Home Loans, which can submit your application to as many as nine institutions and provide you with a variety of rates to choose from. Their Bond Indicator is a free online pre-qualification program that can help you determine how much money you can afford.

First-time homebuyers are targeted by government programs

Additionally, there are government programs to aid first-time buyers, such as FLISP, which provides a subsidy to first-time homebuyers earning between R3 501 and R22 000 per month in addition to first-timer-friendly house loan alternatives like the 100 percent home loan.

In order to be eligible, you need to:

  • have a monthly household income ranging from R3,501 to R22,000 (inclusive).
  • be at least 18 years old and a resident of South Africa.
  • You can either be married, living with a partner, or alone and responsible for someone else.
  • do not have a government housing program or subsidy in the past
  • already have a bank loan for a home.

A government subsidy will be granted to you if you meet these requirements, and the amount you receive depends on how much money your household makes over the R3 501 threshold. The lower your household’s income, the lower your subsidy will be. The maximum subsidy is set at R121 626, and the minimum subsidy is set at R27 960.

Taking your initial step into the real estate market is something you may want to consider.

Owning a home isn’t that out of reach anymore, thanks to such flexible financing alternatives. Keep in mind that ooba Home Loans provides a variety of resources to help you through the home-buying process.


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