Bond basics for first-time buyers
Prime, deposits, terms and total cost — what every first-time South African home buyer should understand before signing.
Updated By the ZACalc team
What is "prime"?
Prime is the rate banks charge their lowest-risk customers. It's set as the SARB repo rate plus 3.5%. Most home loans are quoted as "prime ± x" — your rate moves up and down with the repo rate.
How much will the bank lend?
Banks generally cap your monthly bond instalment at 30% of gross income. Some go to 100% loan-to-value for first-time buyers, but a 10% deposit usually unlocks a better interest rate (typically 0.5–1% lower).
Term: 20 vs 30 years
A 30-year bond on R1.5m at 11.75% costs about R15 200/month vs R16 250 over 20 years — but you pay nearly R1.6m more in interest. Pick the shortest term you can comfortably afford, then accelerate with extra payments where possible.
All-in costs you'll forget
- Transfer duty (if price > R1.21m).
- Conveyancer / transferring attorney fees.
- Bond registration attorney fees.
- Bank initiation fee (R6 000 – R7 000).
- Monthly admin fee on the loan account.
- Building insurance (mandatory).
- Levies, rates and utilities.
The single most useful trick
Pay anything extra into the bond — even R500 a month. On a 20-year R1.5m bond at 11.75%, an extra R500/month settles the loan ~2 years early and saves over R200 000 in interest. The maths is brutal in your favour when you compound the saving.