Bond Advice!

R

RossCo_

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Hello BroadBand People!

I've been going through some of the older threads but thought I'd ask my question Directly as I am sure there are more people who will find this useful in the Future!

I wanted to get any advice on applying for a Bond,
Every time I go to google the subject I'm just drowned in Ad's and find very little useful information.

I am under 30.
I still live at Home.
I am lucky to have relatively little debt, other then my Car repayments and my Fuel bills insurance etc.

My goal has always been to buy property as soon as I can, Ideally to rent out for a few years before I move out.
Every time I go to the 'Bond Calculators' online The amount It says I need to earn seems so far out of reach I doubt I'd get a Bond by my Mid 30's.

I'd like to avoid all the hate of ' You still live at home?' Please!


Questions:

Who would you advise to get a Bond with.
What Income would you suggest needing before even considering a Bond.
And advice wouldn't go a miss either!
 
more information required - i.e what bond amount are you looking at , also what is your gross income and expenses
 
Go to all the banks as well as SAhomeloans. Ask them what you qualify for and negotiate better interest rates.
 
You need to do an affordability assessment - this will tell you how much you could qualify for. As mentioned a company like SAhomeloans could facilitate this for you.

The assessment is almost the same as applying for a loan, you put in all your income, expenses etc.
 
Have you checked what your credit score is with the credit bureaus?

supersunbird said:
Can get your free (or paid-for reports with scoring) from the below websites:

Transunion (have to pay for scoring, free report doesn't have scoring):
https://mytransunion.co.za/

Experian (free report has scoring):
https://www.creditexpert.co.za/

XDS (free report has scoring):
http://www.credit4life.co.za/

Compuscan (have to pay for scoring, free report doesn't have scoring):
https://www.mycreditcheck.co.za/

For a paid credit report that checks XDS, Transunion and Experian at R79 you can go to any Checkers or Shoprite MoneyMarket counter or you can do it online:
http://www.kudough.co.za/shoprite_partner.aspx

For a paid credit report that uses all 4 the credit bureaus mentioned you can use the below link to buy it online for R99:
https://www.credithealth.co.za/complete-credit-report.htm
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Its difficult

You may for example only get a bond of upto 30% of your gross salary, but even that depends on affordability.

Then you would need a deposit, about 30% off the property purchase price these days once more. Let alone the finance charges, ie a 750 000 property will cost you about R70 000 in finance charges (lawyers fees, transfer duty etc). Remember you normally have to pay both the transfer and the bond attorney. Both comes with their own separate bills.

But there are ways you can score also too. if for the finance charges, and part of the deposit. If you have grown your retirement fund over some period, and your retirement fund supports it, you can get a pension backed homeloan or part of it. That allows you depending of the fund to take a loan guaranteed against 60% of your pension fund. Some offer less. But with that it will be enough to cover the finance charges and deposit.

If you however don't have a deposit, or the finance charges then you need to ask for an loan above the value of the property. Banks generally don't like to approve these as it carries great risk to them.

Your best bank option that's easiest to grant home loans is Standard Bank. From what I understand, Old Mutual also offers a good home loan assistance as well as SA homeloans.

From there you can decide what you can afford. When you make an offer to purchase you have to look at the house and all the things that needs fixing (big cracks can be due to structure damage, or no support beams properly installed. Leaking roof is a big no no, as generally cost a fortune to fix. Best to get a fixer upper in a good area, and then do a lot of the work yourself. Just do it properly or will give you a bigger headache later.

I've met a lot of people think they can get 80% of their salary and they will get huge bonds. For the bank it's a risk and generally they wont even bother.

Oh try upgrade your account to max what you can. ie if with standard and you are on the cheapest option, push higher, as they would be more eager to help you and give a higher rate. You get better assistance on Platinum or Private Banking then on a blue or gold card.
 
RossCo_ said:
Who would you advise to get a Bond with.
Click to expand...

The one offering the best rate. So apply to as many as possible and then negotiate. Don't accept the first offer, especially if you don't have a time limit to offer guarantees.

What Income would you suggest needing before even considering a Bond.
Click to expand...

Well this depends entirely on the cost of the property.

Personally I would steer clear of going on the 30% limit allowed and instead aim for a 20% "must pay" and then pay extra into it to make up the 30% when possible to negate the interest over time.

So basically buy for less than they are willing to give you.

I would say have at least 10% as a deposit if possible and another 10% for the transfer fees and duties as well as immediate costs like security gates and burglar bars etc.
 
Going through this right now. (In fact started the ball rolling yesterday)
1) Convince yourself that you can afford the place. This is where this wonderful calculator comes into play. Essentially, you can determine whether it is better economically to rent or to buy depending on what you are looking at.
http://www.rollingalpha.com/2016/09/27/rent-or-buy-the-calculator/

2) Get married. Having that second income really helps the affordability.

3) Euthanise all your pets (ok this is a joke, but those furry little bastards make buying property unnecessarily complex).

4) Get a good deposit.
 
Get a bond with whoever is cheapest. Bank Loyalty means nothing any more. Nedbank gave me a rubbish interest rate until they realised that I was about to take my 500k deposit elsewhere.

You might need to apply for a bond over 30 years in order to qualify for a larger amount. BUT... you must be disciplined enough to pay the additional instalment every month to still get the house paid off in less than 20 years. The extra interest you pay over the 30 years is outrageous.

My main piece of advice is: Don't buy a house that you can't afford to pay off in less than 15 years. Even sooner is even better.
 
Besides the actual bond repayments, you need to have life cover and house insurance as well.

When i bought my house (which was R550k at the time) i paid bond and transfer fees of about R26k cash (after negotiating it down).

I dont think banks add that to your bond anymore, but i might be wrong.
 
Get the most expensive house you can afford, in the best area available. Rather a smaller place in a good area than a larger place in a "bad" area.
 
XPD said:
Get the most expensive house you can afford, in the best area available. Rather a smaller place in a good area than a larger place in a "bad" area.
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I don't agree with this.
Properties in the lower price ranges have the most growth in value, and also the most likely to be rented. The area (down to the street/complex level) is of utmost importance though. I am going through the process of selling, and also hearing what other people sold for. People selling for pretty much as much as they bought for after 7 or so years of ownership, who bought in a new complex which seemed nice.
Others who have to sell expensive Sandton properties at a loss.

If you want to rent it out, get a place with a private garden that allows pets. Single women with their pets are desperate for places like that.
Get a place where most owners live in their own homes. It helps if you buy a smaller place in a complex with more expensive houses as well.
Take your time. I looked around for about a year before I bought, and was able to recognise a good deal when I finally saw one. Even if you can't afford now, still look around and go to show days.

The bond itself... I bought my last home in 2010, so no real advice in that area. What I do know, is that Betterbond originators worked out well for me. I paid 10% deposit, and in my mind if you cant save 20% while living at home (or in a commune as I did), then you aren't ready to buy property. I kept the other 10% for lawyers fees, and surprises that crop up.
Know that levies change. Before it was transferred to my name, the levy went from R260 to R1200. Budget for bond + levy + rates and taxes + 50% at least. Thinking back, the bond, levy etc of my first place was around 30% of my net income at the time. I like using my money for living and not just paying bills.

Also, don't be afraid of a 30 year bond. You are going to pay extra into your bond and pay it off in 10 anyway, or you are going to milk the tax deduction for as long as possible if you rent it out.

An estate agent friend told me that when listing your expenses on your application, you should only list your fixed expenses, like insurance, phone etc. Not groceries, entertainment and other stuff.
 
Thanks guys, going to take the advice and see what I can get!

Im in no rush so 'Shopping around' will be a great way to start
 
Buy from a developer - no transfers/conveyance fees since you'll be the first owner. Stay in that house for two years after having pumped as much as you can into the bond.

Flip the house after those two years and use the sales profit as the deposit and transfer fees to buy the place you REALLY want. Use some of the sales profit to buy furniture and appliances.
 
YingYang said:
Flip the house after those two years and use the sales profit as the deposit and transfer fees to buy the place you REALLY want. Use some of the sales profit to buy furniture and appliances.
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you don't have to own the property you really want to live in, its a tragedy (from a wealth management perspective) people still subscribe to that view

in my opinion one should buy the best property one can afford in the best location, and then use the yield from that property to live where you want to live within the constraints of your budget.
 
Last edited:
Silly question time,

But can you apply for a bond without having a property to buy ( title deeds )

I see I can't apply on SA home loans without one.

My plan was to get the best Bond possible. Then find a Property
 
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