Buying a 2nd house

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JayM

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I bought a cluster in a complex about 7 months ago, and I'm really not enjoying it. I'd like to buy another house and rent out my cluster as the complex is popular and rental yields are very high.

The problem I have is that even though there is about 700K equity in the existing house (I put down a big deposit), and I can afford about 20% deposit on the new place, my bank won't give me a loan for the rest until I've shown 6 months of rental return from the existing property.

Is there any way to get this right without moving into a temporary place for 6 months? The whole situation seems a bit silly as the banks still offer 'buy-to-let' bonds for properties without any kind of rental agreement in place. If I go for a buy to let bond and let the old place instead of the new place, can the bank do anything? I really don't see the difference.
 
You can get your property leased before hand and show that the rental income is secured for the period required.
 
Electric said:
You can get your property leased before hand and show that the rental income is secured for the period required.
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The banks require proof of this income for 6 months before they'll consider it. Also, this creates a timing issue - what if the new place isn't available to move in and I've already rented out the old one?
 
You don't have to physically rent it but can get the rental signed off by the prospective renter.
Get them to sign a 6 month lease.
You can use this as surety on the new place.
 
Electric said:
You don't have to physically rent it but can get the rental signed off by the prospective renter.
Get them to sign a 6 month lease.
You can use this as surety on the new place.
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I put this to my bank who said: "You need to show the rental income on your bank statement for six months."
 
If you didn't have the rental income, could you afford to pay for both properties? If so, you could argue from that perspective - I've seen plenty of cases where banks get held up on some regulation when it may not even be applicable.
 
JayM said:
I put this to my bank who said: "You need to show the rental income on your bank statement for six months."
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I'm (unfortunately) not surprised: signing a short-term lease agreement doesn't necessarily mean that you will see the cash. According to an estate agent that I once spoke to, the shorter the lease the greater the likelihood of being ripped off.

Remember "Money talks - everything else walks"
 
cguy said:
If you didn't have the rental income, could you afford to pay for both properties? If so, you could argue from that perspective - I've seen plenty of cases where banks get held up on some regulation when it may not even be applicable.
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It would be a tight, but doable, assuming interest rates don't go up more than 2%.
 
Spoke to FNB now as well. Rental income for a property bonded by another bank is not considered at all. :wtf:
 
Try another bank

My friend bought a house and left his Flat on rent, he didn't have a lease in place when they gave him the bond on the new place, he only got someone to rent the place a month later.
 
ost said:
Try another bank

My friend bought a house and left his Flat on rent, he didn't have a lease in place when they gave him the bond on the new place, he only got someone to rent the place a month later.
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Which bank? Could he afford both places without letting out the previous one?
 
JayM said:
Spoke to FNB now as well. Rental income for a property bonded by another bank is not considered at all. :wtf:
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An unethical ploy devised to make you consider moving your bond to their bank. Shop around first, but would you consider doing this?
 
JayM said:
Which bank? Could he afford both places without letting out the previous one?
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Do you have an SO in the house? Do the two of you have separate bank accounts? You could "Lease" the house to her/him? They transfer to your account, you take over some of the financial brunt that they are carrying? Not exactly ethical, but it is not like the banks are being ethical.
 
Dolby said:
What is the difference with this and a standard bond?
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a) higher deposit required
b) they take a % of the value of the property towards the affordability calculation

I could easily qualify to buy the new property using the above scheme. The only problem is that I would rather rent out my old (and more expensive) property.
 
SoulTax said:
Do you have an SO in the house? Do the two of you have separate bank accounts? You could "Lease" the house to her/him? They transfer to your account, you take over some of the financial brunt that they are carrying? Not exactly ethical, but it is not like the banks are being ethical.
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I live alone at the moment.
 
JayM said:
Which bank? Could he afford both places without letting out the previous one?
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I think what really helped was that the he had the flat for quite some time (5+ years iirc) and the value had increased significantly. He could afford both places with his new job :whistle:
 
I think the problem is that you declared that the property will be for rental purposes on your application form.
 
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