Bond / Mortgage Calculator
Calculate your home loan repayment and see how extra payments save interest.
Last reviewed: Source: SARB — Monetary Policy (prime rate)
How a SA home loan actually works
A bond (the common local word for a home loan / mortgage) is an amortising loan secured against the property. You borrow a lump sum from the bank, then repay it in equal monthly instalments over 20 or 30 years. Each instalment is split between interest (what the bank charges for the loan) and capital (reducing what you owe).
Most SA home loans are variable-rate: the interest rate is linked to the prime rate set by the South African Reserve Bank’s MPC. Your contracted rate is usually quoted as “prime minus 0.5%” (a good rate) or “prime + 1.5%” (a higher-risk profile). When SARB raises or cuts the repo rate, your monthly repayment moves accordingly — usually with a month’s lag.
Fixed-rate bonds exist but are unusual in SA and usually priced a point or two above the equivalent variable rate. Most borrowers accept the interest-rate risk in exchange for the lower starting payment.
The amortisation math
Your monthly instalment is calculated so that after the final payment the balance is exactly zero. The formula is:
M = P × (r × (1 + r)ⁿ) / ((1 + r)ⁿ − 1)
Where M is the monthly instalment, P is the loan amount, r is the monthly interest rate (annual rate ÷ 12), and n is the number of months (e.g., 240 for a 20-year bond).
Early in the loan the lion’s share of your instalment is interest — capital barely moves. A R1,500,000 bond at 11.75% prime over 20 years will have ~87% of your first instalment consumed by interest. By year 15 the split flips and most of each rand is reducing the capital balance.
Worked examples at common price points
All examples use the SARB prime rate (assumed 11.75% for illustration) over a 20-year term with no deposit.
R1,000,000 starter home
Loan R1,000,000 at 11.75% over 240 months.
- Monthly instalment
- R10,837
- Total paid over term
- R2,600,860
- Of which interest
- R1,600,860
R2,000,000 family home
Loan R2,000,000 at 11.75% over 240 months.
- Monthly instalment
- R21,674
- Total paid over term
- R5,201,721
- Of which interest
- R3,201,721
R5,000,000 upper-market purchase
Loan R5,000,000 at 11.75% over 240 months.
- Monthly instalment
- R54,184
- Total paid over term
- R13,004,302
- Of which interest
- R8,004,302
At 11.75%, you roughly pay the house price again in interest alone over 20 years. Even a small rate difference compounds massively — a 1% lower rate saves ~R190,000 on a R2m bond.
The single biggest lever: extra payments
Paying even a small extra amount every month dramatically shortens the term and total interest, because the extra goes straight to capital while your contractual instalment still covers the interest on a shrinking balance.
| Extra / month | Term shortened to | Interest saved |
|---|---|---|
| R500 | 18 years 5 months | ≈ R316,000 |
| R1,000 | 17 years 1 month | ≈ R564,000 |
| R2,000 | 15 years 1 month | ≈ R936,000 |
| R5,000 | 11 years 4 months | ≈ R1,575,000 |
An access bond (most SA banks offer one) lets you deposit lump sums and withdraw them later if needed — the money reduces interest while it sits there. It’s the cheapest “savings account” you’ll ever have because the rate saved equals your bond rate.
Deposits, LTV, and what the bank wants
Banks assess three things before approving a bond: your affordability (monthly instalment less than ~30% of gross income), your credit record (minimum 640 FICO/XDS typical), and the loan-to-value (LTV).
- 100% bond (no deposit) — common for first-time buyers at lower price points. Usually priced slightly higher than a 90% bond.
- 10% deposit (90% bond) — typical for second-time buyers. Better interest rate, less risk for the bank.
- 20%+ deposit — best rates, but most buyers struggle to save R400k+ for a R2m purchase.
Remember: transfer duty, bond registration, and conveyancer fees are paid on top of the deposit, not from the bond. Budget another 6–10% of the purchase price for those — see the property transfer cost calculator for the full breakdown.
Term: 20 vs 30 years
Banks now offer 30-year bonds to improve affordability, but the extra decade is expensive. On a R2m bond at 11.75%:
- 20-year term: R21,674/month instalment, R3.2m interest over the term.
- 30-year term: R20,189/month instalment (only R1,485 less), but R5.27m interest over the term.
The 30-year version saves R1,485/month and costs R2m extra in interest. If you can afford the shorter term, take it. If you can only afford 30 years right now, take it and plan to pay more once income rises — the bond contract allows extra payments without penalty.
How this calculator works
Enter the loan amount, interest rate, and term (in months or years). The calculator uses the standard amortisation formula to show your monthly instalment, total paid over the term, total interest, and an amortisation schedule. Optional extra-payment input shows how much faster you’d finish and how much interest you’d save.
The interest rate you enter should be your contracted rate. If your letter says “prime + 0.5%” and the current prime is 11.75%, use 12.25%.
Sources
Frequently Asked Questions
A bond (home loan) is a long-term loan used to purchase property, typically repaid over 20–30 years. The property serves as security (collateral). The lender can repossess if you default.
Prime is set by the South African Reserve Bank (SARB). Mortgage rates are typically prime + a margin (0–2%). Current rate is prime + 1–1.5% for most borrowers. Check with your bank.
Banks typically lend up to 90% of the property purchase price. You need a deposit of at least 10%. Affordability is assessed at a stress rate (prime + 3%) to ensure you can repay if rates rise.
Attorney/conveyancing fees, bond registration, home insurance, rates and taxes (property), body corporate levies, and maintenance. These add 15–20% to monthly housing costs.