1. What is the Bond Affordability Calculator?

The Bond Affordability Calculator helps determine your monthly mortgage payments using FNB's calculation tool. It uses the standard amortization formula to calculate what you can afford based on loan amount, interest rate, and loan term.

2. How Does the Calculator Work?

The calculator uses the bond affordability formula:

Where:

• \( M \) — Monthly payment (ZAR)
• \( P \) — Principal loan amount (ZAR)
• \( r \) — Monthly interest rate (decimal)
• \( n \) — Loan term in months

Explanation: This formula calculates the fixed monthly payment required to fully amortize a loan over its term, including both principal and interest components.

3. Importance of Bond Affordability Calculation

Details: Understanding your monthly bond payments is crucial for financial planning, budgeting, and ensuring you don't overextend yourself financially when purchasing property.

4. Using the Calculator

Tips: Enter the principal loan amount in ZAR, annual interest rate as a percentage, and loan term in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is the typical bond term in South Africa?
A: Most home loans in South Africa have terms of 20-30 years, with 20 years being the most common.

Q2: How does interest rate affect monthly payments?
A: Higher interest rates significantly increase monthly payments. A 1% rate increase can add hundreds of rands to your monthly payment.

Q3: What additional costs should I consider?
A: Remember to factor in bond registration costs, transfer duties, insurance, and monthly levies if buying in a complex.

Q4: What is the maximum bond I can afford?
A: Most banks use a debt-to-income ratio of 30-35%, meaning your total monthly debt repayments shouldn't exceed 30-35% of your gross monthly income.

Q5: Can I pay off my bond faster?
A: Yes, most bonds allow for additional payments which can significantly reduce the total interest paid and shorten the loan term.