The amount you pay on your bond account every month is your installment.
What is the percentage instalment to income?
Generally, your installment may not exceed 30% of your income as a guide, however under the National Credit Act (NCA) a full affordability calculation must be completed. This means that your total income less your total expenses per month must leave you with a surplus amount that will allow you to repay the loan amount. It is important that you do not over commit yourself financially in terms of debt and it is for this reason that the Banks will undertake an affordability calculation.
How to calculate my percentage instalment to income?
To work out your percentage installment, divide the monthly installment by your monthly income and multiply it by 100.
For example:
Monthly installment R3 000
Monthly income R12 000
0.25×100=25%
Thus, if your income is R12 000 a month, and your installment on your bond is R3 000 a month, the percentage installment is 25%. Bear in mind that your repayment may never exceed 30%