STORMERSFAN
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So I'm not having any luck submitting my application on the fnb app.. If I ph the call centre will I still get the ebucks?
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Buying my first house
- Thread starter joker08
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I want to buy a house in Capetown in or around Rylands. Here mostly its Indians and I am planning to rent out to Indians from my native-land living here with no families here, I can always throw them out if they are not paying rent, they dont create problems.
Or the other option is I know an agent who charges 8% commission ( yes 8%) but provides a sort of insurance that if the tenants don't pay he/insurance company covers the rent, I still have to speak to him to get the exact details but that's what heard from the person who uses this agent. My friend has leased a few places through him and so far he has no trouble whatsoever.
Basically I got the rental part covered and willing to take the risk. But from what you all have said, it seems that the bank wont cover the cost of construction so I have to consider the possibility that I may not be able to rent out for a few years.
zerocool2009
Honorary Master
How difficult is it ? Apply via NAV (pm me please)
zerocool2009
Honorary Master
You think being a landlord is fun. All sorted, insurance if someone dont pay.
Here is my motto, lets say you buy a place and it stands empty for 12 to 24 months, can you still afford it? (Worst case scenario 1).
Scenario 2, interest rates goes up by 6%, can you still afford it?
I ran your idea by the bug tree bank. They said they would not fund something like that as it isn’t residential (in the sense, house with 1+ flats)
midnightcaller
Expert Member
zerocool2009
Honorary Master
Yes! Lol! Spot on! Had finger trouble on that one
Some tips I've learnt having gone through the buying process recently (mostly a repeat of other's comments):
1. Make sure you can afford an interest rate cycle from the current rates to say 11%. You don't want to lose your house when the interest rates go up.
2. Banks will not use potential rental income as part of the affordability assessment. If you can't afford it outright then forget it.
3. If you're self employed then be prepared for a lot of paperwork and rejected applications. Banks do not like granting 100% bonds to self-employed people with an unstable income. They may help if you can put down a decent deposit though (like 25%). They want to see that the client is risking their own capital and not just theirs.
4. Don't bother trying to get a fixed interest rate - the banks will add a couple of percent to the rate they would have given you and they'll only fix it for a short duration (usually about 2 years or 5 years if you're lucky). The bank always wins.
5. Cut as much expenses as you can to increase your affordability. I managed to reduce my insurance to about 30% of what I was paying and that spare couple of thousand extra helps a lot.
6. If you're not forced to move into the new property by a specific date then under no circumstances agree to move before the transfer goes through. Don't set any dates. If you do then you'll pay the seller occupational rent (about 1% of the property value per month) should the transfer process get delayed (rates clearance certificate from municipality, deeds office, etc.).
7. Pay as much extra into your bond as possible. Forgo replacing your vehicle, don't spend money on expensive holidays, eat out less (or not at all), etc. and pump that money into your bond instead.
8. Don't open any credit facilities once you apply for a bond. It will affect your credit score and your credit liability. For example if you don't have the purchase costs in cash (for transfer duty, bond registration, etc.) in your pocket then don't assume you can extend your overdraft by R100K or R200K to cover those costs once the bond has been approved in principle. It may cause your bond application to be rejected and short term unsecured loans are an extremely expensive way to finance the purchase of a property.
9. Approach the banks for loans if you like but also use bond originators (Ooba, Betterbond, etc.) to ensure you're getting the best deal. Ooba managed to obtain a very favourable rate for me (well below prime on a 100% bond) which I didn't manage to obtain going direct (got prime +0.5% going direct).
10. If you're not in the financial position to purchase a property now then organise your finances and lifestyle to make it possible in future.
My biggest tip is don't replace vehicles if you don't need to. My wife's vehicle is nearly 20 years old and mine is over 10 years and by not replacing them it saves us about R14000 per month (2 x car payments + insurance) which is enough to cover a R1.8 million bond. This is probably the most effective way to save money in order to purchase a property. By using that saving and adding the extra we have we were able to look at properties up to nearly R 3 million. If we had purchased new vehicles we'd only be able to look at properties of around R1.2 million.
Eat out less, cancel DSTV, pay off and close clothing accounts, settle short term debt, start saving for the purchase and transfer costs, etc. Save, save, save.
1. Make sure you can afford an interest rate cycle from the current rates to say 11%. You don't want to lose your house when the interest rates go up.
2. Banks will not use potential rental income as part of the affordability assessment. If you can't afford it outright then forget it.
3. If you're self employed then be prepared for a lot of paperwork and rejected applications. Banks do not like granting 100% bonds to self-employed people with an unstable income. They may help if you can put down a decent deposit though (like 25%). They want to see that the client is risking their own capital and not just theirs.
4. Don't bother trying to get a fixed interest rate - the banks will add a couple of percent to the rate they would have given you and they'll only fix it for a short duration (usually about 2 years or 5 years if you're lucky). The bank always wins.
5. Cut as much expenses as you can to increase your affordability. I managed to reduce my insurance to about 30% of what I was paying and that spare couple of thousand extra helps a lot.
6. If you're not forced to move into the new property by a specific date then under no circumstances agree to move before the transfer goes through. Don't set any dates. If you do then you'll pay the seller occupational rent (about 1% of the property value per month) should the transfer process get delayed (rates clearance certificate from municipality, deeds office, etc.).
7. Pay as much extra into your bond as possible. Forgo replacing your vehicle, don't spend money on expensive holidays, eat out less (or not at all), etc. and pump that money into your bond instead.
8. Don't open any credit facilities once you apply for a bond. It will affect your credit score and your credit liability. For example if you don't have the purchase costs in cash (for transfer duty, bond registration, etc.) in your pocket then don't assume you can extend your overdraft by R100K or R200K to cover those costs once the bond has been approved in principle. It may cause your bond application to be rejected and short term unsecured loans are an extremely expensive way to finance the purchase of a property.
9. Approach the banks for loans if you like but also use bond originators (Ooba, Betterbond, etc.) to ensure you're getting the best deal. Ooba managed to obtain a very favourable rate for me (well below prime on a 100% bond) which I didn't manage to obtain going direct (got prime +0.5% going direct).
10. If you're not in the financial position to purchase a property now then organise your finances and lifestyle to make it possible in future.
My biggest tip is don't replace vehicles if you don't need to. My wife's vehicle is nearly 20 years old and mine is over 10 years and by not replacing them it saves us about R14000 per month (2 x car payments + insurance) which is enough to cover a R1.8 million bond. This is probably the most effective way to save money in order to purchase a property. By using that saving and adding the extra we have we were able to look at properties up to nearly R 3 million. If we had purchased new vehicles we'd only be able to look at properties of around R1.2 million.
Eat out less, cancel DSTV, pay off and close clothing accounts, settle short term debt, start saving for the purchase and transfer costs, etc. Save, save, save.
that sucks, I always thought they would take that into account, but I suppose it does make sense that they won't since if the tenant can't pay you need to fund the shortfall.
zerocool2009
Honorary Master
Some banks take 50% into consideration (of existing rental).
zerocool2009
Honorary Master
4. I got quoted 7% over 60 months now recently (which aint bad at all, but I will lose my flexi bond), which is more worth than fixing a bond (my honest 2c)
9. Ohhhh stay away from mortgage originators (going direct can save you thousands)
On my previous property the bond originators offers sucked and I went direct.
This time I tried both direct and via an originator and Ooba managed to beat one of the banks down to 6.195% (prime minus 0.805%) on a 100% bond.
I'll take the cheapest option whether it's direct or via an originator. Just because it didn't work for someone else or for one purchase doesn't mean it's not worthwhile using both options when purchasing. My experience was total opposites each time I purchased. Try both and pick the best offer - it keeps the banks on their toes and it costs the buyer nothing other than some paper work.
The_Ogre
Honorary Master
Nope, they don't. Before I wanted to buy my current house, I told the bank that I'll be renting my old house out. They said it's too risky. That basically forced me to sell my house before they even looked at my application. They told me they need to close that bond because my income would not be enough to service both bonds (1/3 of income to bond repayments law).
From the lender's perspective, rental income you might possibly gain is merely hypothetical income. Which is the truth, after all. Seeing that makes is easier to understand that you really have to be able to fund the whole project yourself.
For yourself, don't do your calculations based on 12x rental income. Rather work with the more conservative estimate of only 10 months' rental coming in, each year.
For yourself, don't do your calculations based on 12x rental income. Rather work with the more conservative estimate of only 10 months' rental coming in, each year.
- If you rent to students, they are likely not to want to pay for the long summer holiday (when they'll probably go home), and they may give notice before then. If, at the start of the next year, they ask to rent from you again, you might want to take them back again, even on that basis, if they'd been good tenants the first time round.
- If you have a bad experience with a tenant leaving the premises in a poor state, you'll need time to renovate.
- In any case, it is always better to allow yourself that leeway of a month with no rental income, than falling for the temptation to take in just any tenant, possibly a bad one, just because you desperately need to fill a gap in your finances. Much better to have planned the time (and loss of rent, if need be) to do all the background checks properly, and to interview and choose tenants carefully.
I was having a chat with my neighbor yesterday and he said he is planning to sue the original owners of the property because of two reasons :-
1. plans are not accurate, he told me reasons but I dint understand. Something to do with the garage plans.
2. One wall is leaky and was not disclosed.
He is an attorney so quite possible he just taking his chances.
My question is how do I avoid such a situation. Is there like some 100 point checks I can do when I am planning to buy a house? is there a service available to do these tests for me like we do dekra testing for cars ?
1. plans are not accurate, he told me reasons but I dint understand. Something to do with the garage plans.
2. One wall is leaky and was not disclosed.
He is an attorney so quite possible he just taking his chances.
My question is how do I avoid such a situation. Is there like some 100 point checks I can do when I am planning to buy a house? is there a service available to do these tests for me like we do dekra testing for cars ?
Hi it's been some time, I am looking for a house again, gave up on it last time as was busy with my twins and other stuff. Found a house and about to make an offer the only issue the property is right in front of a railway line, In fact the whole street is built in front of a railway line.
There are only like 5 trains that run on it a day and it doesn't run on weekends. I am not concerned about the noise. But there are 2 houses for sale on the same street which is making me concerned,
There are only like 5 trains that run on it a day and it doesn't run on weekends. I am not concerned about the noise. But there are 2 houses for sale on the same street which is making me concerned,
Railways often bring crime. They essentially provide cheap/free transport to thieves who can hop on and off without detection. It may not be that bad if there isn't a station close by but if there is and the trains are moving slowly past the houses it may facilitate unwelcome "visits".
The same usually applies to houses bordering on a freeway - easy access for house robbery.
zerocool2009
Honorary Master
Get the plans for the house, look for unusual stuff.
I know of an estate in the south of JHB, FNB wont give bonds anymore, Balwin build on a fuel line !
zerocool2009
Honorary Master
My advice, in the OTP, make it a requirement (as easy as that). But lately alot of banks ask for approved plans ! (if not, it must first be fixed)
Scooby_Doo
Honorary Master
Just don't.