Buying a 2nd house

[Splinter]

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.

So, in one year you will go from renting a place, to buying your own place, and then also buying another rental flat?

Thor, no offence, but I retract my offer to meet you. Unless others here on this forum have met you in real life, I have my concerns.

 

[Thor]

So, in one year you will go from renting a place, to buying your own place, and then also buying another rental flat?

Thor, no offence, but I retract my offer to meet you. Unless others here on this forum have met you in real life, I have my concerns.

Join the group next weekend. It will make a lot more sense in person since you only have a tenth of the information. It's not a big deal though

 

[shadow_man]

Join the group next weekend. It will make a lot more sense in person since you only have a tenth of the information. It's not a big deal though

What meet? I'd like to come and give you **** too

 

[GoB]

Go to another bank or even a bond originator and don't mention the property in your affordability check... worked for me.

 

[kanzen]

So just to clarify, will the banks only allow a maximum of 30% gross over however many properties you end up purchasing?

Example:

Your salary is R50,000 which puts your max monthly instalment at approximately R15,000. You've currently got a bond with R500,000 outstanding ( around R5,000 repayment) which leaves R10,000 per month available for the next property to be bonded. Is that how they calculate the affordability for the second bond?

Edit: if you have a lot more disposable income available to pay for both, surely they will consider it?

 

[SauRoNZA]

So just to clarify, will the banks only allow a maximum of 30% gross over however many properties you end up purchasing?

Example:

Your salary is R50,000 which puts your max monthly instalment at approximately R15,000. You've currently got a bond with R500,000 outstanding ( around R5,000 repayment) which leaves R10,000 per month available for the next property to be bonded. Is that how they calculate the affordability for the second bond?

Edit: if you have a lot more disposable income available to pay for both, surely they will consider it?

That's why having a tenant in the property matters as it increases your disposable income.

 

[kanzen]

That's why having a tenant in the property matters as it increases your disposable income.

The problem is that I'd like to buy a place that would be my primary residence which would leave the current property as the rental. They will only count the rental income if the tenants have been staying there for a while.

My disposable income, after expenses, is more than the 30% the banks work on. What I'm trying to find out is the terms of which the bank is willing to see as affordability.

 

[Sly21C]

I just came back from ABSA bank and they will only offer a second home loan if:
- 30% of your gross income will be able to pay for both your current (first home loan) and your second home loan installments.
- You move out of your current residence and stay with your parents (or a bush somewhere, where its free) and rent out your current home for a minimum of 6 months. The bank wants to see the rent income for 6 months. You can then move to your second home. They also want to see a contract that is at least 12 months long.

I guess that's how banks work.

 

[Adenoid Hynkel]

I just came back from ABSA bank and they will only offer a second home loan if:
- 30% of your gross income will be able to pay for both your current (first home loan) and your second home loan installments.
- You move out of your current residence and stay with your parents (or a bush somewhere, where its free) and rent out your current home for a minimum of 6 months. The bank wants to see the rent income for 6 months. You can then move to your second home. They also want to see a contract that is at least 12 months long.

I guess that's how banks work.

It's fairly easy to "rent" out your current property that you're still living in.

 

[kanzen]

I just came back from ABSA bank and they will only offer a second home loan if:
- 30% of your gross income will be able to pay for both your current (first home loan) and your second home loan installments.
- You move out of your current residence and stay with your parents (or a bush somewhere, where its free) and rent out your current home for a minimum of 6 months. The bank wants to see the rent income for 6 months. You can then move to your second home. They also want to see a contract that is at least 12 months long.

I guess that's how banks work.

Thanks for this info. It might be worth working out a rent-to-buy contract for a place I'd like to purchase whilst the tenants stay in my place...obviously not the ideal situation but should certainly be possible.

 

[Jehosefat]

My disposable income, after expenses, is more than the 30% the banks work on. What I'm trying to find out is the terms of which the bank is willing to see as affordability.

It's not based on "disposable income, after expenses". Its based on gross income. And that is not the bank's limitation, it is part of the NCA so if a bank does lend to you above that threshold they can be subject to fines for reckless lending.

 

[kanzen]

It's not based on "disposable income, after expenses". Its based on gross income. And that is not the bank's limitation, it is part of the NCA so if a bank does lend to you above that threshold they can be subject to fines for reckless lending.

Ya, I figured that from the last poster before you. Looks like I'll need to just pay off my current bond then apply for a new loan.