Buying a 2nd house

ice_cubes said:
I think the problem is that you declared that the property will be for rental purposes on your application form.
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Have not applied. Just doing my homework before I sign an OTP.
 
JayM said:
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.
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Do whatever will get you the loan in a manner you can afford.

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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Good trick.

JayM said:
Have not applied. Just doing my homework before I sign an OTP.
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You may get a totally different story from an actual application.
 
I've never had banks tell me i couldn't use rent on a bonded property as income.
Usually the calculation is they'll take only 30% of rental though.

My issue is that I usually end up having to buy properties for cash as they won't give me a loan, sigh.
 
So did OP eventually manage to get the second house?
 
JayM said:
Sold it. I'm now renting...don't feel like property ownership in SA fits in with my long term plans.
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I see...it seems as though banks make it difficult for current home owners to buy a second place with the aim of renting out the original one. I'm trying to purchase another place to rent out my existing one to family, but it doesn't look too optimistic.
 
kanzen said:
I see...it seems as though banks make it difficult for current home owners to buy a second place with the aim of renting out the original one. I'm trying to purchase another place to rent out my existing one to family, but it doesn't look too optimistic.
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I also want to buy a second property with the intention of renting it out. I haven't approached a bank yet, but from what I have read so far in this forum, it's not a good idea to disclose to a bank that you intend to buy to rent out. The thing with me is that I won't be able to afford to pay for both my current property's monthly installments AND the property I intent to buy to rent out. I only have funds for up to 6 month's worth of installments for the second property.
 
kanzen said:
I see...it seems as though banks make it difficult for current home owners to buy a second place with the aim of renting out the original one. I'm trying to purchase another place to rent out my existing one to family, but it doesn't look too optimistic.
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Why thou? Why are banks against this? I am also in the process of buying additional apartments to rent out.
 
Thor187 said:
Why thou? Why are banks against this? I am also in the process of buying additional apartments to rent out.
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They look at total exposure. Wanted to do this in 2003 with a third property and they insisted I had to sell one.
 
I wanted to build a second place on a plot I own and the bank told me rental income on an existing property doesn't count at all. Seems banks do their own thing. Unless that's for a building loan.
 
biometrics said:
They look at total exposure. Wanted to do this in 2003 with a third property and they insisted I had to sell one.
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That's so silly, I would have thought the more property you have the better as it's all assets that the bank could take of you fail to pay.


Or did you already have like 2 loans and where looking for a third?
 
Thor187 said:
That's so silly, I would have thought the more property you have the better as it's all assets that the bank could take of you fail to pay.


Or did you already have like 2 loans and where looking for a third?
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Correct. Total exposure too much. Rental income not factored in.
 
Heavyonthemagick said:
I wanted to build a second place on a plot I own and the bank told me rental income on an existing property doesn't count at all. Seems banks do their own thing. Unless that's for a building loan.
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This. They don't mind if you want to buy a rental property - they just don't take the estimated rental income into consideration as to whether you can afford the new bond or not.

It's basically a risk analysis thing - if your tenant skips, or becomes one of those squatters, they need to know that you can afford to pay the bond without the rental income.
 
Thor187 said:
Why thou? Why are banks against this? I am also in the process of buying additional apartments to rent out.
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What? You were just posting elsewhere that you renting so that you can save up to buy?
 
Splinter said:
What? You were just posting elsewhere that you renting so that you can save up to buy?
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Yes. It's a long term project. This year I will buy a place that I live in so will be paying the bond instead of the rent and then will also buy another place that will be rented out. That is this year, then next year I have a commercial property that I want to buy and I have heard through the grapevine the owner is having financial difficulties so I'm keeping my eye on it to swoop.
 
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