So you’ve been working for a few years now and earning good money. You may or may not have a little saved up and you’re now thinking about finally putting your renting days behind you.

But can you actually afford a house on your salary? Will you be able to afford the bond repayments? How will it affect you financially? Well, the answer actually isn’t all that complicated.

Albertus Van Staden, head of credit at FNB Housing Finance, spoke to Fin24 and says that there are a few things you’ll need to assess your ability to repay your home loan - notably your income and expenses. These are used to calculate whether or not you’ll be able to pay your mortgage. 

Your income

Your income includes your (and perhaps your partner’s) salary as well as any commission you receive or any other add-ons like allowances or overtime. 

If your income is not the same every month due to factors like commission or overtime, then the bank will either use a lower portion of this amount, or a three-month average. 

Your expenses

Your expenses are made up of three groups: credit, living and other expenses. These are things you are obligated to pay, essential expenses like transport and food that will be difficult to scale down.

Your risk profile is then determined and your repayment of the loan is calculated. 

According to Property24, your risk rating and interest rate is usually lower if you can put down a deposit. If you don’t have a little nest egg saved up already, you might want to put your house buying plans on hold while you save up. It might mean pulling back on those expensive nights out or going to the salon every month, but it’ll be worth it in the end when you own your very own home. 

Use online tools to see how far you are from your goal

Property24 has an online bond calculator and affordability calculator so you can estimate just how much you’ll be paying back on your house and/ or how much you can afford. 

While this may not be a completely accurate representation of what kind of home loan you’ll get (you need to factor in your credit score and so on), it does give you an idea of what you’ll need to get together to get your foot on the property ladder so to speak. 

Just because you’re not earning as much as you’d like yet doesn’t mean you can’t try to buy a house. But remember that your first house probably won’t be the one you’ve been dreaming of owning since you were little and that this is just the first step.

Think about the hidden costs

You’re not just paying your bond every month, but you might also need to pay rates and taxes or levies too. 

If you’re buying a house
The municipal rates cost, according to Etchells and Young covers all the services provided to you by your local municipality including sewerage, maintenance and the collection of refuse. 

Property rates are calculated according to the value of the land the property is on as well as the property itself and any improvements that might have been made to it. So it’s based on the market value of the property. 

The overall municipal value will determine how much you will pay.

If you’re buying a flat/townhouse/ or in a complex
There’s usually a body corporate in place that establishes an administrative fund which will be used to cover expenses like maintenance costs, insurance cover, general repairs, etc. 

For more information on how levies are raised and special levies, visit Etchells and Young’s blog.

Transfer and bond fees

According to ooba.co.za, if you’re buying a home for more than R900 000 you’ll have to pay transfer costs which includes a transfer duty. Even if you’re not taking out a home loan, you’ll still have to pay a bond registration cost and bank initiation fee. These costs are not part of your bond repayments. 

You can calculate what your transfer fees might be here

What else?

Also remember the cost of water and electricity as well as the cost of homeowners insurance. Homeowners insurance does not cover the contents of your home, so if you’re wanting to protect your personal possessions, you’ll have to get separate insurance for that. 

Most importantly, remember that the interest rate will change over time and this will affect how much you have to repay.