President Jacob Zuma is “paying back the money” with a home loan he got from VBS Mutual Bank – a financial institution with three branches in Limpopo province and one in Johannesburg.
The Presidency issued a statement on Monday, announcing that Zuma has transferred the amount of R7 814 155 to the SA Reserve Bank (Sarb) – as ordered by the Constitutional Court at the end of March this year – in respect of his private homestead at Nkandla.
“The president raised the amount through a home loan obtained from VBS Mutual Bank on its standard terms – one of the few financial institutions, which offer home loans in respect of land owned by traditional authorities,” the Presidency’s statement said.
A VBS Mutual Bank employee told Fin24 by telephone that the bank grants home loans to qualifying individuals, including traditional communities who own land. A home loan is granted to an individual, partnership, trust, closed corporation, private company or any prospective owner who wants to buy, improve or build his or her own fixed residential property.
To get an idea of the amount the president would need to pay back, Fin24 used the Property24 bond repayment calculator and assumed that the president would pay back the loan over a 20-year term at an interest rate of 10.5%.
According to the calculation, it will cost Zuma, who earns a monthly salary of about R241 666 a total amount of R78 014.95 per month in mortgage payments over a 20-year repayment period.
Fincheck, an online financial and loan comparison website, said on its website VBS Mutual Bank does not stipulate a maximum or minimum age for approving loans and grant payment over as much as 30 years.
The usual conditions apply, such as that the mortgage bond amount applied for must not exceed the market value of the property, the applicant must have a proven source of income to service the required instalment repayment and the instalment must not exceed 30% of the applicant’s gross income.
According to its corporate website, VBS Bank is a wholly black-owned specialist corporate finance and retail bank that is registered with and regulated by the Sarb.
The bank was established in 1982 and initially operated as the Venda Building Society. Its Sarb banking license number is 1051, governed by the Mutual Bank’s Act. The bank received a permanent licence to operate in October 2000.
Its 2016 financial statements showed the bank had cash and equivalents of R250m and showed a profit of R4.9m.