105% home loans in South Africa: What do they cover?

Article summary

• While the 100% home loan removes the need for a deposit, the 105% home loan removes the deposit as well as transfer and bond registration costs upfront.
• The 105% home loan will have higher monthly repayments and interest rates but saves money in the short-term.
• Applying to multiple banks improves your chances of securing a 105% home loan.

In an attempt to boost the first-time home buyers’ market, banks introduced the 100% home loan, where homebuyers could acquire a home loan without having to pay a deposit.

Now, some banks have gone one step further and introduced the 105% home loan, which removes even more obstacles for the homebuyer.

What costs does the 105% home loan incorporate?

• The Deposit.
• Transfer costs and transfer duty.
• Bond registration.

Deposit

The deposit is an upfront payment on the home loan, usually amounting to 10% of the property purchase price.

Transfer costs

A conveyancing attorney (hired by the seller) transfers the bond from the seller to the buyer. The buyer pays the conveyancing attorney transfer fees dependent on the valley of the property (the higher the purchase price, the higher the fees).

Transfer duty

This is a tax paid to SARS. Like the transfer of property, transfer duty is dependent on the purchase price.

Properties worth less than R1 100 000 are exempt from transfer duty.

Bond registration

The bank hires an attorney to register the bond in the buyer’s name. The buyer pays the attorney a fee dependent on the purchase price of the property.

All of these additional costs are incorporated into the 105% home loan, removing a major obstacle for first-time buyers.

How much do you save?

To get an idea of what you save, you can use our Transfer Calculator to determine the transfer and bond registration costs of a property.

For example, on a property purchased for R1 500 000 and a home loan of R1 500 000, costs would be as follows:

Transfer costs R36,992

Bond registration R43,029

So you’ll be saving R80,021 on the home purchase.

Qualifying for a 105% home loan

To qualify, you will need to have a good credit record, as the bank is taking a risk by funding such a large home loan.

Anything above 661 is considered a good credit score.

You can find out your credit score by getting prequalified with ooba Home Loans using our free, online tool, the Bond Indicator.

Should I get a 105% home loan?

A 105% home loan will require higher monthly repayments and interest rates to compensate for the reduced upfront costs.

So you need to ensure you have sufficient income to pay the higher monthly costs.

You can find out what your monthly repayments will be using our Repayment Calculator. This will help you budget efficiently.

Improve your chances of getting a 105% home loan

You can improve your chances by applying with ooba Home Loans. We will submit your application to multiple banks. Some banks may be more willing to grant 105% home loans than others.

Banks have different lending criteria, and competition between banks means some may be willing to take a greater risk to secure a customer.

So apply with ooba Home Loans and improve your chances of securing a 105% home loan as well as lower interest rates.