Buying a home? These are the numbers you should know

So, you have saved up for a deposit. You have decided what you want in a home, as well as the area you would like to live in. You think you are ready to buy a home. But not so fast: what about the numbers?

Reinier van Loggerenberg, CEO of Craft Homes, says if there is one gap he sees over and over in South Africa’s housing market, it is understanding.

“People want to buy. They are tired of renting. They saved something.

“But the moment they start looking, jargon and guesswork creep in: ‘How much can I really afford?’, ‘Why was my pre-approval less than I expected?’, and ‘Does debt review mean I am shut out forever?’ 

He has this clear, practical guide for first-time buyers and anyone re-entering the market as well.

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Affordability: what banks actually look at

Affordability is not just the bond repayment. Lenders assess your total monthly obligation and whether your income can comfortably manage it, Van Loggerenberg says.

You can build your own view the same way:

• Net income: Your take-home pay after tax and deductions.
• Existing debt: Credit cards, personal loans, vehicle finance and store accounts.
• Essential living costs: Food, transport, medical aid and school fees.
• Property costs: Rates and taxes, levies (if sectional title), home insurance, life cover, utilities and maintenance.

Helpful hints

• Aim to keep your total debt repayments (including a new bond) below 35 – 40% of your net income.
• Keep home-related costs predictable. If levies or rates are high, you may need a smaller bond to stay within a safe monthly number.
• Stress-test interest rates. Model your repayment at +2 to +3 percentage points above today’s rate. If your budget only works at the perfect rate, it is not robust enough.

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How much should you spend?

Start bottom-up, not top-down is Van Loggerenberg’s advice. Fix your monthly ceiling. Decide on the maximum total housing spend you are comfortable with (bond and rates/levies and insurance and a maintenance buffer). Work backward. Use a bond calculator to see what loan size matches that monthly ceiling at conservative interest rates.

Van Loggerenberg also warns consumers to remember once-off costs. Transfer duty (if applicable), bond registration costs, legal fees, council deposits, moving costs and initial furniture or appliances must all be paid before you can say the house is yours. “Many buyers budget for the monthly repayments and then get surprised by the once-offs.”

He points out that a deposit changes the game. “Even a deposit of 5 – 10% of the purchase price can improve the chance of approval and the interest rate you are offered. A lower rate compounds to big savings over time.

“Also leave room to breathe. Life happens. Keep an emergency fund. A home should anchor your financial life, not strain it.”

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Your credit score: what moves the needle 

Your credit score signals reliability more than wealth does, Van Loggerenberg says. Banks ask: do you pay on time, every time?

He says these tips will help keep your credit score on an even keel:

• On-time payments are king. Set debit orders and avoid paying “almost on time”.
• Use matters. Keep revolving debt (credit cards/store accounts) well below limits. Less than 30% use is a strong signal.
• Do not open lots of new accounts before you apply for a bond.
• Keep older accounts in good standing to show length of history.
• Check your report with one of SA’s credit bureaus and dispute errors – it is your right.

Once you secured a bond, keep your accounts paid up and do not buy any other big items as this will flag your application for review.

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Debt review: how to speed up your comeback

Debt review is not a permanent label, Van Loggerenberg points out. “Many South Africans use it to stabilise, then rebuild.”

After exiting debt review, you can follow this recovery checklist:

• Finish the programme and request your clearance certificate from your debt counsellor.
• Ensure all bureaus are updated – follow up until your profile reflects the clearance.
• Re-establish positive behaviour with small, manageable facilities you settle in full monthly.
• Maintain three to six months of clean bank statements with no unpaid items and no chronic overdraft.
• Show income stability, as consistent employment and predictable deposits matter.

“Banks want to lend to people who demonstrate changed behaviour. Your goal post-review is a tidy track record, not a rush.”

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Make approval easier: small moves with big impact

• Reduce unsecured balances three months before applying as this boosts affordability and your score.
• Avoid large discretionary spends, such as loans, right before the bank reviews your statements.
• Prepare your documents, such as your ID, payslips (usually 3 months), bank statements (3 – 6 months) and proof of residence.
• Self-employed? Then you should keep clean management accounts, signed financials and up-to-date tax records as the banks need clarity.
• Consider a deposit to tip borderline applications into “approved” and improve rate offers.
• Avoid co-signing or standing surety for others while you apply as it weakens your profile.

ALSO READ: Five ways your home bond can provide peace of mind

Use calculators and pre-qualification to de-risk decisions

A quality bond affordability calculator is your first filter, Van Loggerenberg says. He says this is how you can test how much you can afford:

• Try different purchase prices and deposit sizes.
• Also check repayments at the current rate and if there was an increase of 1 or 2%.
• The impact of levies/rates on your monthly repayments.
• Once-off transfer and bond costs to ensure your cash buffer is sufficient. (Transfer duty is covered if you buy directly from the developer.)

After doing this, you can do a pre-qualification that gives you a realistic price band and highlights any issues early (like a bureau error or affordability gap). Shopping with a pre-qualification also strengthens your position with sellers.

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Product fit matters as much as the price

Do not force a financial “yes” onto a lifestyle “no”, Van Loggerenberg warns.  

He says you should consider:

• Location efficiency: how far will you travel to work and school every day. Time is money.
• Operating costs – energy efficiency, levies that include meaningful services, security that lowers insurance.
• Resale and rental liquidity in the area. You are buying a home and a financial asset. Both must make sense.

“Sometimes a slightly smaller unit in a better-run development is the smarter buy over the long term because monthly volatility is lower and exit demand stronger.”

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Next steps you can take today:

• Pull your credit report and resolve any issues.
• Run your budget through a bond calculator using conservative rates.
• Set a deposit target and automate your savings with a recurring transfer to a savings account.
• Get pre-qualified and shop within that band. Be on the lookout for levies, rates and operating costs.
• Choose the home that fits your life and your budget.