Best Home Loan lenders in South Africa for 2025
- Written by Wesley Vos
- Updated
Home Loans
SA Home Loans: Best for flexible repayment options
Annual Interest (APR)
11.75%-13%
Loan Amount
Up to 100%
Loan Term
20 or 30 yrs
Apply on partner site
Pros & cons
Pros
- Generous repayment terms ranging from 20 to 30 years
- In-house insurance makes the process easier and more convenient
- The company prides itself on clear communication, making sure borrowers understand every aspect of the home loan process.
- SA Home Loans offers products for home buying, insurance, and personalized financial solutions.
- Clients praise the company's exceptional customer service, noting that staff go above and beyond to assist.
Cons
- While SA Home Loans has a strong online presence, it has fewer physical branches than some traditional banks.
- Some reviewers mention challenges with the loan approval process or delays in the disbursement of funds.
- Admin and initiation fees apply
- Variable interest rates may increase over time
- Long approval time compared to some banks
Our take
Overview
SA Home Loans has been South Africa’s leading non-bank mortgage provider since its inception in 1999. Starting as a small startup, the company has grown significantly by focusing exclusively on mortgage lending, becoming a specialist in this area. With over 190,000 clients and billions in home loans issued, SA Home Loans has earned a reputation for understanding the specific needs of South African homeowners and providing competitive, flexible mortgage solutions.
SA Home Loans offers a range of home loan products designed to suit various financial situations. They provide flexible repayment terms, competitive interest rates, and unique options like their 30-year home loan, which reduces monthly payments by extending the repayment period. Additionally, SA Home Loans offers in-house insurance options to protect homeowners’ investments, making homeownership more accessible and secure for South Africans.
Key Facts
- Flexible Loan Terms: SA Home Loans provides home loans with flexible repayment terms of up to 30 years, allowing borrowers to choose a repayment period that best suits their financial needs.
- Interest-Only Options: The Edge Home Loan lets borrowers pay only the interest for the first three years, which is ideal for those anticipating an increase in their income in the future. After three years, the loan transitions into a standard 20-year home loan.
- 100% Financing Available: SA Home Loans offers a 100% Home Loan option, eliminating the need for a deposit. This makes it easier for borrowers to purchase a home without needing upfront savings.
- In-House Insurance Options: To safeguard your investment, SA Home Loans provides in-house insurance options that cover loss or damage to your property. These are managed directly through your loan account for added convenience.
- Tailored Interest Rates: The interest rates for SA Home Loans are variable and based on the borrower’s risk profile, which could lead to lower monthly payments for those with a strong financial situation.
- Government Employee Benefits: The Government Employees Housing Scheme (GEHS) Mortgage Loan offers up to 100% financing, flexible terms of up to 30 years, and discounted interest rates, making it an attractive choice for government employees.
- Nifty Guide: SA Home Loans provides this convenient “How it all works” guide to help you understand their process, enabling you to make informed and confident decisions when purchasing your home.
- Calculator: Their Home Loan Calculator is easy to use and quickly gives you information about what you can afford.
Known qualification requirements
- Valid South African ID
- Proof of income (recent payslips or bank statements)
- Proof of residence
- Credit check and affordability assessment
- Completed home loan application form
Fees
Initiation fee: R6,037.50 once off
Monthly admin fee: R69
Time to receive funds
The approval process typically takes between 3-5 business days, depending on the completeness of the application and the verification of required documents.
Illustrative Example
Price of house: R1,500,000.00
Deposit: R100,000.00
Loan Amount Requested: R1,400,00.00 (house price minus deposit)
Interest Rate (personalised): 11.75% p.a
Payment Term (years): 20
Transfer Fees:
Deeds Office Fees: R1,544.00
Attorney Transfer: R30,515.00
VAT: R4,577.25
Total: R36,636.25
Bond Fees:
Deeds Office Fees: R1,544.00
Attorney Bond Registration: R28,530.00
VAT: R4,279.50
Total: R34,353.50
Transfer Duty: R12,000.00
Initiation Fee (VAT inclusive): R6,037.50
Total bond, transfer and initiation fees: R89,027.25
Total Interest: R2,241,255.73
Total Repayment: R3,641,255.73
Estimated Monthly Repayment: R15,171.90
*Please note this is just an illustrative example of what it would cost you. Your rate and initiation fee will be determined according to your personal risk profile. To get an accurate quote we recommend getting a quote from SA Home Loans.
Home Loans
Sentinel Homes: Best for non-traditional financing
Annual Interest (APR)
11.75%
Loan Amount
R400k-R3m
Loan Term
Up to 20 yrs
Apply on partner site
Pros & cons
Pros
- Reviews on their customer service is overwhelmingly positive.
- They offer financing to people with variable incomes like self-employed individuals, freelancers, or foreign workers, who may not qualify for traditional home loans.
- In-house insurance offered to help streamline the process.
- Simple and free online application.
- Innovative instalment sale model
- High approval rate for non-traditional borrowers
- Competitive interest rates linked to prime
Cons
- You only become the full owner of your house once it is fully paid off
- They only finance properties between R400k and R2,9m
- They only finance up to 95% of the property value
- Only available in selected regions
- No early ownership transfer until loan is paid in full
Our take
Overview
Sentinel Homes, founded in 2018, is a South African home finance company that offers an alternative to traditional mortgage bonds. They specialize in installment sale agreements, making homeownership more accessible for freelancers, commission earners, contract workers, and self-employed individuals—groups that are often overlooked by traditional mortgage lenders. This innovative approach functions similarly to car loans or hire-purchase agreements, where Sentinel Homes retains the property title until the buyer has completed all payments. This offers a more flexible and accessible route to homeownership for those who might find it challenging to qualify for a conventional mortgage.
The installment sale model from Sentinel Homes provides a lower entry barrier to homeownership, particularly beneficial for those without a standard salary slip or with irregular incomes. Applicants need to meet specific requirements, such as providing a minimum deposit of 5%, choosing a property with a market value above R400,000, and selecting a property located in metropolitan areas like Gauteng, Western Cape, Nelson Mandela Bay, Mangaung, Buffalo City or eThekwini. This model allows Sentinel Homes to broaden homeownership opportunities for those who might otherwise be limited to renting or low loan-to-value mortgage offers, enabling them to invest in their homes similarly to traditional mortgage holders.
Key Facts
- Non-Mortgage Financing Option: Sentinel Homes provides home loans through installment sale agreements, which differ from traditional mortgages by allowing Sentinel Homes to retain legal ownership of the property until the loan is fully repaid.
- Up to 95% Financing: Sentinel Homes offers financing up to 95% of the property’s purchase price, making it an ideal option for self-employed individuals, freelancers, foreign workers, or anyone who may not qualify for a traditional mortgage or who can’t afford a large deposit.
- Flexible Loan Amounts and Locations: Loans are available for properties valued at more than R400,000, with a maximum financing limit of R3 million in most areas and up to R5 million in the Western Cape, provided a 20% deposit is made.
- Competitive Interest Rates: The interest rates on Sentinel Homes’ installment sale agreements are competitive and tied to the prime rate, offering a market-aligned alternative to traditional home loans.
- Additional Consumer Protections: Installment sales through Sentinel Homes are covered by the Alienation of Land Act, providing extra consumer protections compared to traditional mortgage financing, especially in cases of financial difficulty.
- No Impact on Sale Process: Selling a home financed through Sentinel Homes is straightforward and can be done at any time, as long as the sale price covers the outstanding debt. This process is similar to traditional mortgages and does not cause additional delays in the transaction.
- In-House Insurance Options: To safeguard your investment, Sentinel Homes provides in-house insurance options that cover loss or damage to your property. These are managed directly through your loan account for added convenience.
Known qualification requirements
- You must be 18 years or older and have a clear copy of your ID document
- Be a South African citizen or foreign national with permanent residency
- Proof of income in the form of 3 months’ bank statements & payslips
- Offer to purchase
Fees
Initiation fee: R6,037.50 once off
Monthly admin fee: R69
Time to receive funds
Once all documents are submitted and the application is approved, the process is comparable to traditional bond financing, taking approximately 3-5 business days to finalize, depending on the transaction’s complexity.
Illustrative Example
Buyers can receive financing of up to 95% of a home’s purchase price through Sentinel Homes. Here are two examples illustrating how this works:
Example 1:
Mr. A wants to buy a home valued at R1,000,000. Sentinel Homes approves a 90% home loan, so Mr. A will need to provide R135,263 in cash to cover the remaining costs.
Costs:
- Price of home: R1,000,000
- Transfer duty: R3,000
- Transfer fees: R24,279
- Bond fees: R0 (Not applicable with Sentinel Homes financing)
- Origination fee: R7,985
- Total Cost: R1,035,264
Financing Details:
- Less: 90% Financing Approved by Sentinel Homes: R900,000
- Cash Required (Total Cost – 90% Financing): R135,263
Example 2:
Ms. B is interested in purchasing a home for R2,500,000. Sentinel Homes approves a 90% home loan, so Ms. B will need to provide R402,985 in cash to cover the remaining costs.
Costs:
- Price of home: R2,500,000
- Transfer duty: R108,000
- Transfer fees: R37,000
- Bond fees: R0 (Not applicable with Sentinel Homes financing)
- Origination fee: R7,985
- Total Cost: R2,652,985
Financing Details:
- Less: 90% Financing Approved by Sentinel Homes: R2,250,000
- Cash Required (Total Cost – 90% Financing): R402,985
*Please note this is just an illustrative example of what it would cost you. Your rate and initiation fee will be determined according to your personal risk profile. To get an accurate quote we recommend getting a quote from Sentinel Homes.
Home Loans
Absa Bank: BEST for first-time home buyers
Annual Interest (APR)
11.75%-13%
Loan Amount
Up to 106%
Loan Term
Up to 30 yrs
Apply on partner site
Pros & cons
Pros
- Receive up to 106% for first-time buyers to cover additional costs like transfer duties and fees.
- Start your application digitally for a fast, seamless process with 24/7 status tracking. Alternatively, you can apply in person or by phone.
- MyHomeowner Journey is a free home-buying course designed to teach you everything you need to know about purchasing your first home.
- Repayment terms of up to 30 years.
- In-house insurance offered to help streamline the process.
Cons
- Some customers perceive Absa's interest rates and fees as higher than those of other banks
- Some reviews report delays in loan application responses and customer service inquiries
- Some customers report communication difficulties, especially with updates on loan applications or term changes
- High initiation fee (R6,037.50)
- Interest rates tied to prime, which may fluctuate
- Eligibility criteria can be strict for certain income groups
Our take
Overview
Absa is one of South Africa’s leading banks and a trusted provider of home loans. Known for its flexible and competitive mortgage options, Absa caters to a wide variety of clients, from first-time homebuyers to property investors. Their home loans come with a range of customizable features, including up to 105% financing for first-time buyers and the option to choose between fixed and variable interest rates.
Absa’s home loan offerings also include specialized products for specific groups, such as young professionals and low-income earners. Their “MyHome” and private banking packages come with additional perks like cashback rewards, discounted attorney fees, and financial planning services, making Absa a versatile choice for many different types of homebuyers.
Key Facts
- High Loan-to-Value Ratios: Absa provides home loans of up to 106% for first-time homebuyers, which can help cover additional costs such as transfer fees and bond registration fees, making it easier to handle the initial expenses of buying a home.
- Flexible Repayment Options: Absa offers a variety of home loan options, including flexible repayment terms of up to 30 years and a choice between fixed or variable interest rates, allowing borrowers to customize their loans to suit their financial needs.
- Free Home Buying Course: Absa offers “MyHomeowner Journey,” a free home-buying course designed to teach you everything you need to know about purchasing your first home. This valuable service helps aspiring homeowners understand the home-buying process and make informed financial decisions with confidence.
- Special Benefits for Young Professionals and Private Clients: Young professionals under 35 can qualify for up to a 105% bond on properties valued up to R1,500,000, along with a 30% discount on attorney bond registration fees. Private banking clients receive personalized services, including access to dedicated bankers and financial planning consultations.
- Affordable Housing Options: The MyHome Home Loan is tailored for low-income earners, offering up to 100% financing and access to government housing subsidies. This option also provides a 50% discount on bond registration fees.
- Convenient Online Application Process: Absa enables customers to apply for home loans online in just 15 minutes and provides tools like the Home Loan Estimator to help potential buyers quickly and easily determine their affordability.
Known qualification requirements
- Valid South African ID
- Proof of income (payslips or bank statements)
- Good credit score and history
- Deposit (optional for some loans, but typically 10% of the purchase price)
- Property must be located in South Africa and registered in the borrower’s name
Fees
- Initiation Fee: R6,037.50 to open the home loan account.
- Bond Registration Fees: Varies depending on the loan amount, with discounts available for first-time buyers and young professionals.
- Transfer Costs: Applicable to properties valued above R1 million.
Time to receive funds
Once the loan is approved, it typically takes 3-5 business days to process the bond registration and disburse funds, depending on the completion of all required documents.
Illustrative Example
Price of house: R1,500,000.00
Deposit: R100,000.00
Loan Amount Requested: R1,400,00.00 (house price minus deposit)
Interest Rate (personalised): 11.75% p.a
Payment Term (years): 20
Transfer Fees:
Deeds Office Fees: R1,544.00
Attorney Transfer: R30,515.00
VAT: R4,577.25
Total: R36,636.25
Bond Fees:
Deeds Office Fees: R1,544.00
Attorney Bond Registration: R28,530.00
VAT: R4,279.50
Total: R34,353.50
Transfer Duty: R12,000.00
Initiation Fee (VAT inclusive): R6,037.50
Total bond, transfer and initiation fees: R89,027.25
Total Interest: R2,241,255.73
Total Repayment: R3,641,255.73
Estimated Monthly Repayment: R15,171.90
*Please note this is just an illustrative example of what it would cost you. Your rate and initiation fee will be determined according to your personal risk profile. To get an accurate quote we recommend getting a quote from Absa.
Home Loans
Nedbank: Best for cashback incentives
Annual Interest (APR)
11.75%-13%
Loan Amount
Up to 105%
Loan Term
Up to 30 yrs
Apply on partner site
Pros & cons
Pros
- Customers can receive up to R20,000 cashback when applying for a home loan online.
- Offers both fixed and variable interest rate options, providing borrowers with flexibility.
- First-time buyers may qualify for up to 105% financing, which helps cover additional costs.
- The Nedbank Money app provides pre-approval options, affordability calculators, and other helpful resources.
- Offers repayment terms of up to 30 years, which can help reduce monthly payments.
- Supports green energy home loans
Cons
- Requires detailed credit checks and extensive documentation, potentially excluding some applicants.
- Higher interest rates may apply to borrowers with less favorable credit scores.
- Additional costs such as initiation and monthly service fees can increase the overall cost of the loan.
- Some benefits, like the cashback offer, are mainly available to existing Nedbank customers.
- Building loans only available with NHBRC-registered builders
- Interest rates are variable, which may increase over time
Our take
Overview
Nedbank is a leading bank in South Africa, renowned for its wide variety of home loan products tailored to meet different financial needs. Whether you’re a first-time homebuyer, planning to build a new home, or looking to refinance an existing property, Nedbank has flexible loan options for various situations. They offer home loans that can finance up to 100% of the property’s value, and first-time buyers may qualify for up to 105% financing to help cover extra expenses like bond and transfer fees.
Nedbank allows borrowers to choose between fixed and variable interest rates or a combination rate option that lets them split their loan into different portions with varied rates. This flexibility helps clients pick a repayment plan that matches their financial goals and comfort with risk. Additionally, Nedbank provides cashback incentives for online applications and significant discounts on bond registration fees, making their home loans both competitive and accessible to a wide range of customers.
Key Facts
- Flexible Financing Options: Nedbank offers home loans that can cover up to 100% of a property’s value. For first-time buyers, there are additional financing options of up to 105% to help cover costs like bond registration and transfer fees.
- Interest Rate Benefits: Nedbank customers may qualify for special interest rates. The bank also offers the flexibility to choose between variable, fixed, or combination interest rates, allowing borrowers to tailor their loans to their financial needs and market conditions.
- Cashback Incentives: Customers who apply for a home loan online or through the Nedbank Money app can receive up to R20,000 in cashback, enhancing the overall value of their home loan package.
- Affordable Legal Costs: Nedbank provides up to a 50% discount on attorney fees for bond registration, significantly lowering the initial costs associated with buying a home.
- Renewable Energy Financing: For those looking to adopt sustainable living practices, Nedbank offers a renewable energy finance option that covers up to 110% of the property’s value, with the extra 10% specifically allocated for energy solutions like solar panels.
- Their Home Loan Calculator is easy to use and quickly gives you information about what you can afford.
Known qualification requirements
- Valid South African ID or passport
- Proof of income (recent payslips or bank statements)
- Credit check and good credit history
- Offer to purchase for the property
- Additional documents for building loans (e.g., builder’s risk insurance, NHBRC certificates)
Fees
- Initiation Fee: R6,037.50
- Monthly Admin Fee: R69
- Cash Deposit Fee: R30 + R1.51 per R100 deposited
- Bond registration and transfer fees may apply, with some discounts available for first-time buyers.
Time to receive funds
Once the home loan is approved, the process to disburse funds typically takes 3-5 business days. This can vary depending on the completion of bond registration and verification processes.
Illustrative Example
Price of house: R1,500,000.00
Deposit: R100,000.00
Loan Amount Requested: R1,400,00.00 (house price minus deposit)
Interest Rate (personalised): 11.75% p.a
Payment Term (years): 20
Transfer Fees:
Deeds Office Fees: R1,544.00
Attorney Transfer: R30,515.00
VAT: R4,577.25
Total: R36,636.25
Bond Fees:
Deeds Office Fees: R1,544.00
Attorney Bond Registration: R28,530.00
VAT: R4,279.50
Total: R34,353.50
Transfer Duty: R12,000.00
Initiation Fee (VAT inclusive): R6,037.50
Total bond, transfer and initiation fees: R89,027.25
Total Interest: R2,241,255.73
Total Repayment: R3,641,255.73
Estimated Monthly Repayment: R15,171.90
*Please note this is just an illustrative example of what it would cost you. Your rate and initiation fee will be determined according to your personal risk profile. To get an accurate quote we recommend getting a quote from Nedbank.
Home Loans
FNB: Best for high loan-to-value ratios
Annual Interest (APR)
11.75%-13%
Loan Amount
Up to 110%
Loan Term
5-30 yrs
Apply on partner site
Pros & cons
Pros
- Offers up to 110% financing, which covers additional home-buying costs.
- Provides loan terms of up to 30 years, reducing monthly payments.
- Earn up to 50% back in eBucks on your first repayment.
- Easy online application process with tools like affordability calculators.
- Options for joint applications with up to 12 people, increasing affordability.
Cons
- Risk-based pricing may lead to higher rates for some borrowers.
- Cashback incentives are primarily for online applications.
- Standard service fees and initiation costs can increase overall expenses.
- Comprehensive credit checks and documentation required, potentially excluding some applicants
- Variable interest rates can lead to increased repayments
Our take
Overview
Operating since 1838, FNB provides a wide range of home loan products designed to meet the diverse needs of South African homeowners. Whether you’re a first-time homebuyer, planning to build a new property, or looking to renovate an existing home, FNB offers flexible home loan solutions to help you achieve your property investment goals. With options like the Flexi Option Home Loan and the Future Use facility, FNB gives you the flexibility to manage your loan repayments and access additional funds as needed.
FNB’s home loans come with several features to suit various financial situations, including competitive interest rates—both fixed and variable—and the option to make extra payments to shorten your loan term and save on interest costs. The bank also offers a convenient online application process through its mobile app and website, making it easy to manage your loan with transparency and ease. Additionally, a dedicated property finance consultant is available to guide you through every step, ensuring a smooth home-buying experience.
Key Facts
- High Loan-to-Value Options: FNB offers up to 110% financing for first-time homebuyers, which can help cover additional costs such as transfer duties and bond registration fees, making it easier to become a homeowner.
- Flexible Repayment Terms: FNB’s home loans come with repayment terms of up to 30 years, offering flexibility and potentially lower monthly payments for borrowers.
- Collective Buying Feature: FNB’s unique collective buying option allows up to 12 people to jointly apply for a single home loan, making it possible to purchase higher-value properties while sharing the financial responsibility.
- Cashback and eBucks Rewards: Customers can earn up to 50% back in eBucks on their first home loan repayment, adding value through FNB’s rewards program.
- Comprehensive Online Tools and Resources: FNB offers a range of online tools, including home loan calculators, affordability assessments, and detailed guides to help customers make informed decisions about their home financing options.
Known qualification requirements
- Valid South African ID
- Signed offer to purchase
- Proof of income (3 months’ bank statements or payslips)
- Proof of residence (recent utility bill)
- Good credit history and affordability assessment
Fees
- Initiation Fee: R6,037.50 for opening the home loan account.
- Monthly Admin Fee: R69, waived for certain clients.
- Bond Registration Fees: Additional costs for property transfer and registration.
Time to receive funds
Once all documentation is completed and approved, FNB typically disburses funds within 3-5 business days, though bond registration and verification can affect this timeline.
Illustrative Example
Price of house: R1,500,000.00
Deposit: R100,000.00
Loan Amount Requested: R1,400,00.00 (house price minus deposit)
Interest Rate (personalised): 11.75% p.a
Payment Term (years): 20
Transfer Fees:
Deeds Office Fees: R1,544.00
Attorney Transfer: R30,515.00
VAT: R4,577.25
Total: R36,636.25
Bond Fees:
Deeds Office Fees: R1,544.00
Attorney Bond Registration: R28,530.00
VAT: R4,279.50
Total: R34,353.50
Transfer Duty: R12,000.00
Initiation Fee (VAT inclusive): R6,037.50
Total bond, transfer and initiation fees: R89,027.25
Total Interest: R2,241,255.73
Total Repayment: R3,641,255.73
Estimated Monthly Repayment: R15,171.90
*Please note this is just an illustrative example of what it would cost you. Your rate and initiation fee will be determined according to your personal risk profile. To get an accurate quote we recommend getting a quote from FNB.
Home Loans
Capitec: Best for digital application convenience
Annual Interest (APR)
6%-11.75%
Loan Amount
Up to 100%
Loan Term
Up to 30 yrs
Apply on partner site
Pros & cons
Pros
- Apply online in under five minutes, with no paperwork needed.
- Provides up to 100% financing, eliminating the need for a large deposit.
- Track your application progress in real-time via the online portal.
- Up to 50% discount on bond attorney fees through their network.
- Offers interest rates starting from 6%, linked to JIBAR.
Cons
- Application process is primarily online, which may not suit everyone.
- Interest rates are variable and can change with JIBAR fluctuations.
- Minimal in-branch support, primarily focused on digital services.
- No documents needed initially, but required after pre-approval.
Our take
Overview
Capitec, in partnership with SA Home Loans, offers a straightforward and digitally-driven home loan solution in South Africa. Their home loans are designed to provide a simple, convenient way for you to finance your new home or switch your existing home loan. With competitive interest rates tailored to your financial profile and discounts on bond attorney fees, Capitec makes homeownership more accessible.
The application process is entirely online, allowing you to apply in just a few easy steps, and you can track your application status at any time. You also get the support of a dedicated property finance consultant who guides you through each step, ensuring a smooth experience from application to approval. This partnership combines Capitec’s customer-centric banking approach with SA Home Loans’ expertise, offering a unique blend of simplicity, speed, and competitive pricing in the home loan market.
Key Facts
- Loan Terms up to 30 Years: Capitec offers flexible home loan terms up to 30 years, allowing for lower monthly repayments and better financial planning.
- Competitive Interest Rates: Capitec offers competitive linked interest rates starting from 6%, making it a cost-effective choice for homebuyers. The interest rate is linked to the Johannesburg Interbank Agreed Rate (JIBAR), which typically tracks with the repo rate.
- Fast and Simple Application Process: The home loan application process is entirely online and paperless, taking less than five minutes to complete. This streamlined approach allows you to apply without needing any documents on hand initially.
- Real-Time Application Tracking: Capitec’s home loan portal allows you to track your application in real-time through a clear, six-step process, ensuring you are always informed of the status and any further requirements.
- Up to 100% Financing: Capitec offers up to 100% financing on home loans, enabling you to purchase a property without needing a large upfront deposit. This feature is particularly beneficial for first-time homebuyers.
- Discounts on Legal Fees: Customers can receive up to a 50% discount on bond attorney fees when using Capitec’s home loan services through SA Home Loans’ national panel of attorneys, reducing the overall cost of purchasing a home.
- Special Rates for Government Employees: Capitec provides a discounted interest rate for government employees who apply for a new home loan or switch their existing bond, provided they use the Government Employee Housing Scheme (GEHS) stop order.
- Calculator: Capitec’s Home Loan Calculator is easy to use and quickly gives you information about what you can afford.
Known qualification requirements
- Valid South African ID
- Proof of income (recent payslips or bank statements)
- Good credit score and history
- Completed property purchase offer
Fees
- Initiation Fee: Typically applies, though specific amounts vary.
- Legal Fees: Discounts of up to 50% are available through SA Home Loans’ national panel of attorneys.
- Bond Registration Fees: Transfer and bond registration costs apply.
Time to receive funds
After the approval process, which is conducted digitally, funds are generally available within 3-5 business days, contingent upon bond registration and any additional documentation requirements.
Illustrative Example
Price of house: R1,500,000.00
Deposit: R100,000.00
Loan Amount Requested: R1,400,00.00 (house price minus deposit)
Interest Rate (personalised): 11.75% p.a
Payment Term (years): 20
Transfer Fees:
Deeds Office Fees: R1,544.00
Attorney Transfer: R30,515.00
VAT: R4,577.25
Total: R36,636.25
Bond Fees:
Deeds Office Fees: R1,544.00
Attorney Bond Registration: R28,530.00
VAT: R4,279.50
Total: R34,353.50
Transfer Duty: R12,000.00
Initiation Fee (VAT inclusive): R6,037.50
Total bond, transfer and initiation fees: R89,027.25
Total Interest: R2,241,255.73
Total Repayment: R3,641,255.73
Estimated Monthly Repayment: R15,171.90
*Please note this is just an illustrative example of what it would cost you. Your rate and initiation fee will be determined according to your personal risk profile. To get an accurate quote we recommend getting a quote from Capitec.
Home Loans
Standard Bank: Best for government subsidy access
Annual Interest (APR)
11.75%-13%
Loan Amount
Up to 100%
Loan Term
Up to 30 yrs
Apply on partner site
Pros & cons
Pros
- The tiered rate system reduces your interest payments over time.
- You can secure a 100% home loan without a large deposit.
- Repayment terms of up to 30 years, giving you the flexibility.
- You can potentially qualify for FLISP to help cover home purchase costs.
- Offers flexible terms, including options for early repayment without penalties.
- Use your pension as collateral, avoiding bond registration costs.
Cons
- Building and credit life insurance are required, adding to costs.
- Not available for loans on vacant land or certain deposits.
- Rates can change, potentially increasing your monthly payments.
- Includes fees that increase the total cost of your loan.
- Some loans have complex requirements and conditions.
Our take
Overview
Standard Bank offers a variety of home loan options tailored to meet the needs of South African homebuyers. With up to 100% financing available, their home loans cater to both first-time buyers and those looking to invest in property. Standard Bank’s tiered rate system can reduce your effective interest rate over time, providing cost savings as you pay down your mortgage. This unique feature makes their home loans more affordable in the long run.
Standard Bank also provides flexible loan options, including the possibility of pension-backed lending, which allows you to use your pension fund as collateral to secure a home loan without needing to go through traditional credit checks. Additionally, they support government subsidies through the Financial Linked Individual Subsidy Program (FLISP), which helps lower-income South Africans with their home purchases. These features, combined with comprehensive insurance options and expert guidance throughout the home-buying process, make Standard Bank a strong choice for those seeking a home loan in South Africa.
Key Facts
- Tiered Interest Rate System: Standard Bank offers a tiered interest rate system that can reduce your effective interest rate over time as you repay your home loan, helping you save on overall interest costs.
- Flexible Financing Options: You can obtain up to 100% financing on your home loan, which makes it easier to purchase a property without needing a large deposit upfront.
- Flexible Repayment Terms: Standard Bank’s home loans come with repayment terms of up to 30 years, offering flexibility and potentially lower monthly payments.
- Pension-Backed Lending Option: Standard Bank offers a pension-backed lending option, allowing you to use your pension fund as collateral to secure a home loan, avoiding traditional credit checks and bond registration costs.
- Comprehensive Insurance Requirements: Standard Bank requires building insurance for the entire term of the loan and may also require credit life insurance to protect against unforeseen circumstances, ensuring both your investment and the bank’s interest are safeguarded.
- Government Subsidy Access: Through the Financial Linked Individual Subsidy Program (FLISP), eligible borrowers can receive government subsidies to help with home purchases, making homeownership more accessible for those with lower incomes.
- Flexible Repayment Options: Standard Bank provides various repayment options, including fixed and variable rates, as well as options to make extra payments to reduce the term and interest costs of your loan.
- Calculator: Their Home Loan Calculator is easy to use and quickly gives you information about what you can afford.
Known qualification & document requirements
- Valid South African ID
- Proof of income (recent payslips or bank statements)
- Proof of residence
- Good credit score and credit history
- Signed offer to purchase for the property
Fees
- Initiation Fee: R6,037.50
- Monthly Admin Fee: R69
- Bond Registration Fees: Applicable based on the property value, but discounts may be available for first-time buyers or special loan types.
Time to receive funds
After loan approval, the bond registration process typically takes 3-5 business days before funds are disbursed, although this timeline can vary depending on the completion of necessary documentation.
Illustrative Example
Price of house: R1,500,000.00
Deposit: R100,000.00
Loan Amount Requested: R1,400,00.00 (house price minus deposit)
Interest Rate (personalised): 11.75% p.a
Payment Term (years): 20
Transfer Fees:
Deeds Office Fees: R1,544.00
Attorney Transfer: R30,515.00
VAT: R4,577.25
Total: R36,636.25
Bond Fees:
Deeds Office Fees: R1,544.00
Attorney Bond Registration: R28,530.00
VAT: R4,279.50
Total: R34,353.50
Transfer Duty: R12,000.00
Initiation Fee (VAT inclusive): R6,037.50
Total bond, transfer and initiation fees: R89,027.25
Total Interest: R2,241,255.73
Total Repayment: R3,641,255.73
Estimated Monthly Repayment: R15,171.90
*Please note this is just an illustrative example of what it would cost you. Your rate and initiation fee will be determined according to your personal risk profile. To get an accurate quote we recommend getting a quote from Standard Bank.
Home Loans
Investec: Best for personalised service
Annual Interest (APR)
7.5%-11.5%
Loan Amount
Up to 100%
Loan Term
Up to 30 yrs
Apply on partner site
Pros & cons
Pros
- You can obtain up to 100% financing, which allows you to purchase a property without needing a large upfront deposit.
- Investec offers repayment terms of up to 30 years, giving you the flexibility to choose a repayment schedule that suits your financial situation.
- You have the option to repay your loan early without incurring penalties, allowing you to save on interest over the life of the loan.
- Each client is assigned a dedicated private banker, providing you with personalized guidance and support throughout the loan process.
- You can capitalize fees such as registration, initiation, and valuation costs into the loan, reducing your initial out-of-pocket expenses.
- Competitive interest rates starting from 7.5%
Cons
- If you have a lower credit score, you may face higher interest rates, which could increase the overall cost of your loan.
- Investec's home loans are generally geared towards high-net-worth individuals, which might limit accessibility for those with average incomes.
- As a specialized private bank, Investec may not have as many branches as larger retail banks, which could limit in-person service options.
- The application process may require extensive documentation and proof of income, which can be cumbersome and time-consuming for some borrowers.
Our take
Overview
Investec is a specialist bank known for serving the middle and upper-income segments of South Africa, offering premium financial products, including home loans. With over 25 years of experience in wealth management and private banking, Investec tailors its home loan offerings to meet the individual needs of high-net-worth clients. Unlike traditional banks, Investec clients benefit from personalized service through a dedicated private banker, ensuring that each client’s loan application is assessed independently and not via standard credit scorecards.
Investec offers up to 100% financing for various property purchases, including residential, investment, and even holiday homes. Their home loan product is designed with flexibility in mind, allowing clients to include transfer and registration fees within the loan. Additionally, Investec’s home loan clients enjoy benefits such as no penalties for early repayment, competitive interest rates starting from 7.5%, and mortgage protection options to safeguard the loan in the event of death.
Key Facts
- Up to 100% Financing: Investec provides up to 100% financing for home loans, meaning you can potentially secure a property without needing an upfront deposit, making it an ideal option for first-time buyers.
- Interest Rates: Rates start as low as 7.5%, depending on the client’s risk profile and financial situation.
- Flexible Repayment Terms: Investec’s home loans come with repayment terms of up to 30 years, offering flexibility and potentially lower monthly payments.
- Quick Approval Process: The home loan application process is streamlined for quick approval, ensuring that you have access to funds as soon as possible, subject to a property valuation.
- Capitalized Costs: Investec allows borrowers to capitalize registration, initiation, and valuation fees into the loan, reducing the need for upfront payments.
- Access to Additional Funds: Clients have the opportunity to access the capital portion of their repayments once a year for the first five years, offering flexibility for managing unexpected expenses or investing in property improvements.
- Dedicated Private Banker: Investec clients benefit from personalized service with a dedicated private banker, providing tailored advice and support throughout the home-buying process.
Known qualification requirements
- Valid South African ID
- Proof of income (recent payslips or bank statements)
- Offer to purchase for the property
- Credit history and affordability assessment
Fees
Investec home loans include initiation and bond registration fees, though specific fee amounts are assessed case-by-case. Private account holders enjoy benefits such as waived monthly service fees when repayments are debited from their Investec accounts.
Time to receive funds
Once the application is approved, which can take up to 72 hours, funds are typically disbursed within 3-5 business days, contingent on bond registration and any additional documentation requirements.
Illustrative Example
Price of house: R1,500,000.00
Deposit: R100,000.00
Loan Amount Requested: R1,400,00.00 (house price minus deposit)
Interest Rate (personalised): 11.75% p.a
Payment Term (years): 20
Transfer Fees:
Deeds Office Fees: R1,544.00
Attorney Transfer: R30,515.00
VAT: R4,577.25
Total: R36,636.25
Bond Fees:
Deeds Office Fees: R1,544.00
Attorney Bond Registration: R28,530.00
VAT: R4,279.50
Total: R34,353.50
Transfer Duty: R12,000.00
Initiation Fee (VAT inclusive): R6,037.50
Total bond, transfer and initiation fees: R89,027.25
Total Interest: R2,241,255.73
Total Repayment: R3,641,255.73
Estimated Monthly Repayment: R15,171.90
*Please note this is just an illustrative example of what it would cost you. Your rate and initiation fee will be determined according to your personal risk profile. To get an accurate quote we recommend getting a quote from Investec.
Compare personal loan rates with Fundrate's top picks
Lender | Best For | Est. Apr | Loan Amount | Loan Term |
|---|---|---|---|---|
SA Home Loans | Flexible repayment options | 11.75%-13% | Up to 100% | 20 or 30 years |
Sentinel Homes | Non-traditional financing | 11.75% | R400k-R3m | Up to 20 years |
Absa | First-time home buyers | 11.75%-13% | Up to 106% | Up to 30 years |
Nedbank | Cashback incentives | 11.75%-13% | Up to 105% | Up to 30 years |
FNB | High loan-to-value ratios | 11.75%-13% | Up to 110% | Up to 30 years |
Capitec | Digital application convenience | 6%-11.75% | Up to 100% | Up to 30 years |
Standard Bank | Government subsidy access | 11.75%-13% | Up to 100% | Up to 30 years |
Investec | Personalised service | 7.5%-11.5% | Up to 100% | Up to 30 years |
Pros and cons of home loans
While home loans can be useful for buying property, they may not suit everyone. Consider the pros and cons before deciding.
- Increases ownership equity over time
- Interest may be tax-deductible
- Flexible terms range from 10 to 30 years
- Fixed-rate loans offer predictable payments
- Allows purchasing beyond immediate cash reserves
- Requires payments for decades
- Total interest can be substantial
- Property value may decrease
- Requires good credit and stable income
- Requires homeowner's insurance and mortgage insurance
What is a Home Loan?
A home loan is a type of financing specifically for purchasing or refinancing property. With a home loan, you receive funds from a lender to buy a home, and you repay this amount, plus interest, over an agreed period. Home loans in South Africa usually have repayment terms of up to 30 years, and your property acts as collateral for the loan. Home loans are popular because they make it possible to own a home without needing the entire purchase amount upfront.
Loan Use Cases
When might you consider a home loan?
Home loans can be used in several ways, depending on your goals and current financial needs:
- Purchasing a Primary Residence: Secure financing for your home.
- Buying an Investment Property: Grow your income by investing in rental property.
- Home Renovations: Use loan funds to finance major renovations or expansions.
- Refinancing for Better Terms: Consolidate other debts or reduce your monthly payment by refinancing your mortgage.
Loan Eligibility Factors
What do lenders look for when approving a home loan?
To qualify for a home loan in South Africa, most lenders assess these factors:
- Minimum Income Requirements: A steady income is essential; exact requirements vary by provider.
- Credit Score: A good credit score can secure better rates, but options exist for those with lower scores, though often at a higher rate.
- Employment Status: Most lenders look for 6–12 months of stable employment.
- Age Limitations: You must be at least 18 to apply, with a typical age cap to ensure the loan term is completed before retirement.
Credit Score Impact and How to Improve It
How does your credit score affect your home loan?
Your credit score affects your loan terms and eligibility. A higher score can result in better interest rates, while a lower score might limit your options or lead to a higher rate.
Tips to Improve Your Credit Score for Better Loan Terms:
- Pay Bills Promptly: Timely payments build a positive credit history.
- Lower Your Debt: Reducing outstanding debt boosts your credit score.
- Limit New Credit Applications: Too many credit inquiries can lower your score.
- Check Your Credit Report: Review your credit report for errors, which you can dispute with credit bureaus.
Interest Rates Breakdown
How do interest rates work for home loans in South Africa?
Home loan interest rates are influenced by factors like your credit profile, loan term, and the current prime rate.
- Typical Interest Rate Ranges: Home loan rates typically range from 6% to 13% APR.
- Factors Affecting Rates: Your credit score, income stability, and loan amount all play a role in determining your rate.
- Fixed vs. Variable Rates: Many home loans are tied to the prime rate, meaning the rate can fluctuate. Some lenders offer fixed rates, which provide stability for a set term.
What is APR?
The Annual Percentage Rate (APR) represents the full yearly cost of your loan, including interest and any additional fees, so you get a clearer picture of the total cost over time.
Early Repayment Flexibility
Can you repay your home loan early?
Some lenders offer early repayment options, which can help you save on interest:
- No Penalty: Some providers allow early repayments or extra payments without penalties, potentially lowering your interest costs.
- Early Settlement Fees: Some lenders may charge a small fee if you pay off the loan early; check your loan agreement for details.
Comparison with Other Loan Types
How does a home loan compare to other loan products?
Home loans differ significantly from other types of credit. Here’s how they compare:
- Personal Loans: While quicker to obtain, personal loans are typically smaller and come with higher interest rates.
- Overdrafts: These offer flexibility for short-term cash needs but can be costly for large or long-term financing.
- Business Loans: If you’re financing a property for business use, a business loan may have more relevant terms.
Regulatory and Legal Considerations in South Africa
What protections do South African borrowers have?
Home loans in South Africa are regulated by the National Credit Act (NCA), which offers important protections:
- Fair Lending Practices: Lenders are required to assess affordability before granting loans, ensuring that you’re not over-indebted.
- Interest Rate Caps: The NCA sets limits on interest rates to prevent predatory lending.
- Transparency: Lenders must disclose all fees and rates upfront, so you can understand the loan’s total cost.
Alternatives to Home Loans
What are other financing options?
If a home loan doesn’t suit your needs, consider these alternatives:
- Rent-to-Own Agreements: If you’re not ready to purchase, some sellers offer rent-to-own arrangements.
- Personal Loans: For smaller, short-term housing needs, a personal loan might be quicker and easier.
- Overdraft Facilities: Some banks offer overdrafts as an option for short-term financing needs.
How to Apply for a Home Loan
A Step-by-Step Guide to Securing a Home Loan:
- Pre-Qualify: Many lenders offer a pre-qualification option, giving you an estimate of how much you can borrow.
- Prepare Your Documents: Gather your ID, proof of income, bank statements, and credit history.
- Compare Offers: Look at interest rates, loan terms, and fees across multiple lenders.
- Submit Your Application: Complete your application with the lender of your choice.
- Wait for Approval: Approval times vary, but many lenders respond within a week.
- Finalize Terms: Review and sign the final agreement, confirming the loan details.
- Receive Funds: Once everything is complete, the lender will transfer the funds to the seller or into your account.
FAQs
How do I qualify for a home loan in South Africa?
To qualify for a home loan, you typically need a good credit score (usually 640 or above), stable employment, sufficient income to cover monthly repayments, and a deposit, usually ranging from 10% to 20% of the property’s value. Lenders also consider your debt-to-income ratio and financial history to ensure you can afford the loan.
What are the different types of home loans available?
In South Africa, common home loan types include fixed-rate loans, where the interest rate stays the same throughout the term; variable-rate loans, where the rate can change based on market conditions; and access or flexi bonds, which allow you to deposit extra funds and reduce interest, with the option to withdraw funds later. There are also building loans for construction and interest-only loans for specific periods.
How much can I borrow for a home loan?
The amount you can borrow depends on your income, credit score, current debts, and the value of the property you wish to purchase. Lenders typically allow a loan amount where monthly repayments do not exceed 30% to 35% of your gross monthly income. Some banks may offer up to 106% financing for qualified applicants.
What documents do I need to apply for a home loan?
Required documents typically include your ID, proof of income (such as payslips or financial statements for the self-employed), bank statements for the past three to six months, proof of residence, and a completed home loan application form. Additional documents may be needed depending on the lender and your financial situation.
What is the difference between a fixed-rate and a variable-rate home loan?
A fixed-rate home loan has an interest rate that remains constant throughout the loan term, providing predictable monthly payments. A variable-rate home loan, however, has an interest rate that can fluctuate based on the market, which means your monthly payments can increase or decrease over time. Each type has its pros and cons, depending on market conditions and your financial stability.
How does my credit score affect my home loan application?
Your credit score is a significant factor in your home loan application. A higher credit score increases your chances of loan approval and can qualify you for lower interest rates, saving you money over the loan term. A lower score may lead to higher interest rates or even denial of your application.
Are there any government programs available to assist with home loans?
Yes, the Financial Linked Individual Subsidy Program (FLISP) offers subsidies to help low-income earners purchase a home. To qualify, your household income must be between R3,501 and R22,000 per month, and you must not have received a government housing subsidy before. The subsidy amount varies based on your income level.
How can I improve my chances of getting a home loan approved?
Beyond the property price, you should budget for additional costs such as the deposit, bond registration fees, transfer duty, homeowners insurance, bond protection insurance, and possibly early repayment penalties. It’s crucial to consider these when planning your home purchase.
What are the steps involved in applying for a home loan in South Africa?
Applying for a home loan in South Africa involves several steps to ensure you secure financing and purchase your desired property. Here is a comprehensive guide outlining all the steps:
1. Check Your Credit Score and Financial Status
- Credit Score: Obtain your credit report from a credit bureau to check your score and ensure there are no errors or issues that could affect your application.
- Financial Assessment: Review your income, expenses, and debt levels to determine how much you can afford to borrow. This will also help you understand the size of the deposit you might need.
2. Get Pre-Approval for a Home Loan
- Pre-Approval Application: Contact a bank or financial institution to get pre-approved for a home loan. This involves submitting proof of income, identification, and other financial documents.
- Benefits of Pre-Approval: This process helps you understand your budget and shows sellers you are a serious buyer.
3. Find a Property
- Property Search: Look for properties within your price range through real estate agents, property websites, or attending show houses.
- Offer to Purchase (OTP): Once you find a suitable property, submit an Offer to Purchase to the seller. This legally binding document outlines the terms and conditions of your offer.
4. Submit a Home Loan Application
- Submit the OTP to the Bank: Provide the bank with the signed OTP along with your completed home loan application form.
- Provide Supporting Documents: Submit all required documents, including proof of income (payslips, bank statements), identification (ID/passport), proof of address, and any additional documents requested by the bank.
5. Bank Assessment and Property Valuation
- Affordability Assessment: The bank assesses your financial situation, including your credit score, income, expenses, and debt, to determine if you qualify for the loan.
- Property Valuation: The bank conducts a property valuation to ensure the property’s value aligns with the loan amount requested.
6. Receive a Loan Offer
- Approval or Decline: If approved, the bank will issue a home loan offer detailing the loan amount, interest rate, and repayment terms. If declined, the bank will explain the reasons, and you may need to adjust your application or improve your financial status.
- Review the Loan Offer: Carefully review the terms of the loan offer, including any conditions, fees, and penalties.
7. Accept the Loan Offer
- Sign the Home Loan Agreement: If you agree with the terms, sign the Home Loan Agreement and return it to the bank.
- Meet Any Conditions: Ensure you meet all conditions outlined in the loan offer, such as providing additional documentation or insurance.
8. Bond Registration and Legal Processes
- Appoint a Conveyancing Attorney: The bank will appoint a conveyancing attorney to handle the registration of the bond and the transfer of the property.
- Prepare Legal Documents: The conveyancer prepares all necessary documents for registering the bond and transferring the property.
9. Pay Associated Costs
- Deposit Payment: Pay the deposit to the seller if required.
- Costs and Fees: Pay transfer duties, attorney fees, and bond registration costs.
10. Register the Bond and Transfer the Property
- Deeds Office: The conveyancing attorney submits the bond registration and property transfer documents to the Deeds Office for registration.
- Registration Completion: Once the Deeds Office registers the bond and the transfer, the property is officially transferred to your name.
11. Bank Releases the Funds
- Disbursement of Loan Amount: After registration, the bank releases the loan funds to the seller or seller’s bank as per the OTP agreement.
12. Take Ownership of the Property
- Receive Property Title Deed: The conveyancer provides you with the title deed once all processes are complete, officially making you the property’s owner.
- Move In: You can now take possession of the property and move in.
What home bond fees can I expect?
The interest rate is influenced by various factors, many of which depend on the client. For example, the amount of deposit you can afford to put down can affect your interest rate; generally, a larger deposit can help you qualify for a lower rate. It’s important to consider more than just the interest rate when selecting the best home loan product for your needs, as the rate may vary depending on the option you choose. The best approach is to carefully consider your circumstances and submit an application, as each application and situation is unique.
How long does it take for banks to release funds after a property has been finalized and transferred?
Transfer Duties
Transfer duty is a mandatory fee payable to SARS when purchasing a home valued above R1,100,000. This fee is required regardless of the home bond provider.
Here’s a breakdown of the transfer duties based on the property’s value:
Value: R0-R1,100,000 = Rate: 0%
Value: R1,100,001–R1,512,500 = Rate: 3% of the value above R1,100,000
Value: R1,512,501–R2,117,500 = Rate: R12,375 + 6% of the value above R1,512,500
Value: R2,117,501–R2,722,500 = Rate: R48,675 + 8% of the value above R2,117,500
Value: R2,722,501–R12,100,000 = Rate: R97,075 + 11% of the value above R2,722,500
Transfer duties are calculated as a percentage of the property’s value and vary depending on the buyer’s legal status. Legal entities, such as companies or trusts, are required to pay 8% of the property’s value. In contrast, private buyers pay transfer duties on a sliding scale based on the property’s value.
The transfer duties mentioned above are applicable for the period from 1 March 2024 to 28 February 2025.
Note: If the property is being purchased from a developer, no transfer duty is required, but VAT will be payable on the purchase price.
Conveyancing Costs / Transfer Fees
While the conveyancing attorney is appointed by the seller, the buyer is responsible for paying the ‘Transfer fee.’ This fee is paid to the transferring attorney for transferring the property into the buyer’s name. Transfer fees are calculated on an upward sliding scale based on the value of the property being purchased and must be paid before or at the same time as the property registration/transfer.
Note: The R1,000,000 exemption does not apply to ‘transfer fees’; it only applies to transfer duty.
Bond Registration Fee
When registering your bond at the Deeds Office, you will likely incur bond registration fees or attorney costs. These fees can vary, so it’s advisable to consult with a property finance consultant from SA Home Loans to determine the specific bond registration fees you will need to pay when purchasing your home.
Bank Valuation Fees
Due to the National Credit Act, banks no longer charge separate valuation fees to clients. This fee is now included in the bank’s initiation fees.
Bank Initiation Fees
The National Credit Act allows finance providers to charge up to R6,037.50 (R5,250 + VAT) in initiation fees.
How we choose our best home loan lenders
To select the best home loans, Fundrate evaluates the most prominent lenders in South Africa. Each lender was ranked focusing on four main categories:
Affordability
This section of the scoring evaluates interest rates, penalties, and fees. Lower rates and fees, along with fewer penalties, contribute to a higher score. Lenders that offer rate discounts, grace periods, and the option to change the due date receive bonus points.
Availability
This category considers factors such as minimum loan amounts, number of repayment terms, eligibility requirements, the option to apply with a co-borrower or co-signer, and the loan turnaround time.
Customer experience
This category includes customer service hours, the availability of online applications, online account access, and mobile apps.
Transparency
For this factor, we assess how clearly information is presented to borrowers on the lender’s website. This includes details on credit requirements, rates, fees, and the availability of prequalification.