Step-by-Step Guide to Getting a Home Loan in South Africa

Buying a home is an exciting milestone, but the process of securing a home loan can feel overwhelming. South African banks have specific requirements, and knowing what to expect can improve your chances of approval. This guide breaks down the process step by step and includes service providers to help you along the way.

Step 1: Check Your Credit Score

Before applying for a home loan, it’s important to know your credit score, as banks use this to determine your eligibility and interest rate.

How to check your credit score:

• Use free credit report services like ClearScore.

• You need a score of at least 610 to get approved for a home loan.

• A score above 650 increases your chances of approval and getting a better interest rate.

Tip: If your credit score is low, improve it by paying off outstanding debts and avoiding new credit applications before applying for a home loan. Read more here

Step 2: Determine Your Affordability

Banks will only approve a loan if you can afford the monthly repayments.

How to calculate affordability:

• Use online affordability calculators like Ooba or BetterBond. As a rule of thumb, your monthly bond repayment should not exceed 30% of your gross income.

Consider additional costs like transfer duty, legal fees, and municipal rates.

Step 3: Get Pre-Approved for a Home Loan

A pre-approval letter shows how much you qualify for and strengthens your position when making an offer on a property.

Where to get pre-approved:

• Ooba – One of South Africa’s leading bond originators.

• BetterBond – Compares multiple banks to get the best loan deal.

• Your bank – Most major banks like ABSA, Nedbank, Standard Bank, and FNB offer pre-approvals.

Documents needed for pre-approval:

• Proof of income (latest payslips and 3-6 months of bank statements).

• Credit report.

• Breakdown of monthly expenses.

Step 4: Compare Home Loan Offers

Not all banks offer the same interest rates, so it’s important to compare multiple options. Choose what works for you.

Where to compare home loans:

• Use a bond originator like Ooba or BetterBond to compare rates from multiple banks.

Tip: A larger deposit (10-20%) can help you secure a lower interest rate.

Step 5: Submit Your Home Loan Application

Once you’ve chosen a lender, submit your formal loan application.

Documents required:

• Copy of ID or passport.

• Proof of residence (utility bill or bank statement).

• 3-6 months of bank statements and payslips.

• Signed offer to purchase from the seller.

Processing time: Banks typically take 5-10 working days to process applications.

Step 6: Understand Additional Costs

Buying a home comes with extra costs beyond the loan itself.

Key costs to budget for:

• Transfer Duty – Payable on properties above R1,100,000. Use the PropertyCapital SA calculator 

• Bond Registration Fees – Paid to attorneys handling the bond registration.

• Legal Fees – Conveyancing attorneys charge fees to transfer the property into your name.

Step 7: Approval & Registration Process

Once your loan is approved, the legal process begins.

What happens next:

1. Bank issues a loan agreement – Read and sign the contract.

2. Attorneys handle the property transfer – A conveyancing attorney will oversee the transfer.

3. Registration at the Deeds Office – The process takes 6-12 weeks, after which the property is officially yours.

Tip: Stay in touch with your attorney and bank to monitor the progress of your registration.

Final Thoughts

Getting a home loan in South Africa requires preparation and careful financial planning. By following these steps and working with the right service providers, you can improve your chances of approval and secure the best loan for your needs. Whether you are a first-time buyer or upgrading to a new home, understanding the home loan process will make your journey smoother.

Tip for the yachties and H2A-manne: Three nights at the bar in the USA costs about the same as a monthly payment on a R1.5 million house.