Reports indicate that President Zuma used a “home loan” to repay the R7 814 155 he owed to the South African Reserve Bank for the ‘non-security upgrades’ made to his Nkandla homestead. We’re not sure what criteria were used to qualify him but let’s examine this figure as if he received the same treatment the average South African home loan applicant could expect to receive:
When the average South African applies for a home loan they can expect a maximum loan term of 30 years (depending on the financial institution). If they are (very) lucky their repayment interest rate will be the prime rate.
A loan of 7 814 155 over 30 years at the current prime lending rate (10.5%)would mean monthly repayments would be R71 015.
Banks cap their lending age at 75. No-one older than 75 years would be considered eligible for a home loan. They also routinely limit the loan term to the time remaining until the applicant turns 75.
President Zuma is 74 years and 5 months old today and this means that if he were treated the same as most South Africans he would only have 6 months to repay his loan. This would make his monthly repayments the impossible figure of R1 342 533.
Obviously President Zuma is not the average South African and special treatment for high net worth individuals is not out of the ordinary. But even considering his status and wealth his age would make him a high risk.
Needless to say we would really love to see the terms of that loan agreement.
Find out more about loan terms here.