Use the calculator below to determine your maximum bond amount and an approximate monthly installment. This will serve as a guide to determine what you can afford to borrow from the banks.
Step 1: Calculate Maximum Bond Amount and Installment
Step 2: Calculate Income and Expenses
You will now need to add up all your monthly income and expenses. You should be able to comfortably pay the installment and have additional cash available. Why? Because the banks need to know you will be able to repay the home loan and be able to do so even if interest rates go up again. You also need to be able to pay for rates and taxes that goes with property ownership.
You can download our checklist that can serve as a guideline when calculating all your expenses. It might be a good idea to also use your last couple of months' bank statements to ensure you've listed all your expenses.
Download Income and Expenses template (PDF)
Here is what you need to ask yourself (since this is what the banks also keep in mind):
1. Will I be able to comfortably afford the installment AND the monthly rates and taxes / levies that goes with property ownership?
2. Will I still be able to repay the monthly installment should interest rates rise in future? (Change the interest rate in the calculator to 2% more than the default rate – now look at the difference in the installments).
If you cannot comfortably afford the installment and the additional rates & taxes (plus have something left in case of interest rate changes), the banks will decline your application due to affordability.
After you have completed the above exercise, you should have a fairly good idea of what you will be able to afford, and can start looking at houses in that price range.