How South African banks decide what you can afford

Every lender in South Africa is required by the National Credit Act to satisfy itself that you can service the debt before it grants it. Reckless lending carries real consequences for the bank, so the assessment is not a formality. It runs the same way everywhere, on three inputs.

One: your net income

Banks work from what lands in your account, not from your package. Gross salary, less tax, less pension, less medical aid, less UIF. A large package with heavy deductions can assess worse than a smaller package with light ones, which is the first thing that surprises applicants.

Variable income is treated with caution. Commission, overtime and bonuses are usually averaged over six to twelve months and then discounted, often to somewhere between half and three quarters of the average. If most of your earnings are variable, the bank is lending against a fraction of what you actually take home.

Two: your existing commitments

Every credit agreement on your bureau record is subtracted. Vehicle finance, credit cards, store cards, personal loans, student debt. A credit card counts even when the balance is nil, because the bank assesses the facility you could draw, not the balance you happen to be carrying today.

Living expenses are deducted as well. Banks apply a minimum table based on income band, then compare it against what your bank statements actually show. If your statements show higher spending than the table, they use your statements.

Three: the instalment at the assessed rate

What is left after income less commitments less expenses is your disposable income, and the bond instalment has to fit inside it with room to spare. Most lenders want the instalment at or under thirty percent of gross income, and total debt repayments under about thirty six percent.

The instalment is calculated at prime, currently 10,50 percent as published by the South African Reserve Bank and effective 28 May 2026, adjusted by whatever margin the bank offers you. Some lenders stress test a percentage point or two above that, so the bond they approve is one you could still service if rates rose.

Why the six banks disagree

The framework is common but the settings are not. Each lender chooses how heavily to discount commission, what minimum expense table to apply, how much of a stress test to add, and how much appetite it has for your profile this quarter. The result is that the same application, submitted on the same day, routinely comes back with a spread of more than half a percent between the best and worst offer, and sometimes with one decline alongside five approvals.

That spread is the entire argument for submitting to all of them at once rather than to the bank you happen to bank with. Half a percent on a bond of R1 500 000 over twenty years is roughly R480 a month and more than R115 000 in interest over the term.

What you can change before you apply

• Clear and close small revolving facilities, and get written confirmation.
• Leave three to six months of clean statements. No unarranged overdrafts, no returned debit orders.
• Do not take on new credit in the months before applying, including the car you were going to finance anyway.
• Check your bureau record for errors. They are more common than people expect and they take time to correct.
• Build a deposit if you can. It lowers the amount borrowed and improves the rate offered.