Home loan chances?

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evancol

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Hi all

Im hoping i can get some advice from the experienced members.

Im hoping to be able to purchase a property at the end of the year. My plan is to buy a place to rent out to someone.

I currently work abroad and only return to South Africa twice a year for roughly 3 weeks at a time.
Due to the fact that i don't live in SA i haven't really bought many things there and don't have much of a credit history.

I do have a credit card with absa that I've had for about a year and half now. I made a fair bit of use with my CC last year but always paid it off in full every month. I used it more for the high daily limit when purchasing items or going away over my debit card.

Heres my question. Would absa be likely to give me a loan of about R700k to R1mil?

Im in my early 20's and should also have enough money to put a down payment of about R500k

Thanks
 
evancol said:
Hi all

Im hoping i can get some advice from the experienced members.

Im hoping to be able to purchase a property at the end of the year. My plan is to buy a place to rent out to someone.

I currently work abroad and only return to South Africa twice a year for roughly 3 weeks at a time.
Due to the fact that i don't live in SA i haven't really bought many things there and don't have much of a credit history.

I do have a credit card with absa that I've had for about a year and half now. I made a fair bit of use with my CC last year but always paid it off in full every month. I used it more for the high daily limit when purchasing items or going away over my debit card.

Heres my question. Would absa be likely to give me a loan of about R700k to R1mil?

Im in my early 20's and should also have enough money to put a down payment of about R500k

Thanks
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Should have or do?

Early 20s and you have that much? :wtf:

With that down payment, I am quite sure that you can get the loan.
Try to get a loan 0f R 500 000 rather and pay the other R 500 000 as a deposit/down payment.
 
CamiKaze said:
Should have or do?

Early 20s and you have that much? :wtf:

With that down payment, I am quite sure that you can get the loan.
Try to get a loan 0f R 500 000 rather and pay the other R 500 000 as a deposit/down payment.
Click to expand...

Well I'm currently half way to the R500k mark and I'm 95 percent sure ill be there by November, if not past it.

I want to buy a place for between 1 million and 1.5 million. I intend on putting the 500 i have as a downpayment and getting a loan for the rest. Im not sure if thats the best option, I'm very open to more advice if you have any.

Thanks
 
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etwylite said:
you would be deemed a non resident and only qualify for a 50% bond. this is the same at all banks Afaik.
https://www.fnb.co.za/home-loans/non-residential-home-loan.html
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I just saw in my first post that i said i don't live in SA, which isn't exactly true i suppose. I live and work on a boat and we change countries often, although i do consider SA my home as most of my possessions are there.

I don't think i would be deemed as a non resident, seeing as i do ''live'' in South Africa. I don't have any property elsewhere, not even rental. My salary also gets paid straight into my South African account each month
 
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I would be worried about buying a place for 1-1.5 mill to rent out. You will struggle to find tenants unless that is not a problem for you and not worried about intermittent tenants.

From my own experience people rent because:
a) they don't have enough deposit yet for a bond
b) they have a bad financial record and can't get a bond
c) they like the freedom to move from place to place
d) they are only in the area for a few months on a contract.

Either way it's few and far between that you will get someone who can afford R12-R15k rental - although I could be wrong. It seems that most people rent in the R4k-R7.5k region and that's where you will have the best luck.

I have a friend who bought a place recently for R1 mill and struggled for 6 months to get a tenant to rent for R10k per month. They dropped it down to R8k per month and eventually got a tenant who never paid for the last 3 months and then just disappeared.

As I said I could be wrong but I like to adopt the rental strategy of going for a property that will attract middle class 20-something couples that can treat your property with respect and pay on time. These types of properties usually have a queue of people waiting to rent so getting someone else in if required is never a problem.
 
evancol said:
I just saw in my first post that i said i don't live in SA, which isn't exactly true i suppose. I live and work on a boat and we change countries often, although i do consider SA my home as most of my possessions are there.

I don't think i would be deemed as a non resident, seeing as i do ''live'' in South Africa. I don't have any property elsewhere, not even rental. My salary also gets paid straight into my South African account each month
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I think they base your resident status on how long you spend in the country each year, and I doubt 3 weeks is enough for most of the banks. Also what are the tax implications on your salary?

Despite the large deposit I think the credit history might be a bit of an issue too (depending on how much you want to loan).

Also I don't know if renting out is the best idea. I currently rent out to tenants and have an agency that manages all aspects of the process for a small fee, but I wouldn't want to be out of the country for long periods of time, just in case something happens.

If I were you I'd look at other investments that have lower management demands.

Also, why the R1.5 million mark? Is this based on areas where you think property will appreciate rapidly? is it based on maximising rental returns? Do you know what type of place you want to buy (house, cluster in a golf estate, upmarket apartment in central JHB etc.)?
 
Thanks for the info everyone.

Ive asked this question early so that i can get as much information on it as possible. I still have about 7 months before i return to SA so lots of time to make my mind up and educate myself on property buying.

I would ideally like to buy a place in Ballito on the North coast where i have lived for the last 6 years. I have seen it grow at an unbelievable rate. From a small beach town with one tiny shopping centre to a town that now has multiple shopping malls and a new interchange just built to hand all the traffic entering Ballito on a daily basis. King Shaka airport being only 20 minutes away has also made the area more desirable.

Why the 1.5 million mark? That amount would be at my absolute maximum but id more than likely go for something around 1 to 1.2 million. I can afford it and it seems like those places offer a relatively good return.

I would definitely be using an agent as i will obviously not be around, i do however also have a few family members and friends who would be more than willing to help me out if needed.

As for the type of place i want to buy, it would definitely be in a complex type of place, maybe an apartment in one of the housing estates, but definitely open to suggestions as to better options.

Thanks again for all the info you guys are offering, I'm really appreciating it.
 
evancol said:
Thanks for the info everyone.

Ive asked this question early so that i can get as much information on it as possible. I still have about 7 months before i return to SA so lots of time to make my mind up and educate myself on property buying.

I would ideally like to buy a place in Ballito on the North coast where i have lived for the last 6 years. I have seen it grow at an unbelievable rate. From a small beach town with one tiny shopping centre to a town that now has multiple shopping malls and a new interchange just built to hand all the traffic entering Ballito on a daily basis. King Shaka airport being only 20 minutes away has also made the area more desirable.

Why the 1.5 million mark? That amount would be at my absolute maximum but id more than likely go for something around 1 to 1.2 million. I can afford it and it seems like those places offer a relatively good return.

I would definitely be using an agent as i will obviously not be around, i do however also have a few family members and friends who would be more than willing to help me out if needed.

As for the type of place i want to buy, it would definitely be in a complex type of place, maybe an apartment in one of the housing estates, but definitely open to suggestions as to better options.

Thanks again for all the info you guys are offering, I'm really appreciating it.
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Cool, all I can say is do your homework. Some more questions to consider:

Who am I going to be renting out to? (tourists or someone living in the area)
What are the maintenance costs? (Being at the coast humidity is a concern)
Why is the area booming? (If it's due to tourism, how seasonal is it?)

What you can afford will definitely be determined by the banks. Go through the online calculators available, but remember that they often over-estimate what you can get. Then start considering the additional monthly costs over and above the bond, rates and such (Life insurance to cover the bond, for example, is something many buyers forget about). Also do you homework regarding transfer fees, bond registration and so on.

Then consider if you even want to invest in the S.A. economy (there is no right and wrong here, it depends on your long term goals). If you do, are you sure property is the right investment? My rental property is not giving me the returns I could get from other avenues, however I went to property route to diversify my portfolio. That being said I'm having a long look at whether it's actually worth keeping, or if I should get out now and move the funds into other investment channels.
 
I don't think you'll have a problem with a deposit of R500k... as long as the banks finds value in the property.
 
ToxicBunny said:
1.5m in ballito won't get you much unfortunately
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I know, its not going to be anything big, but I've seen some nice places online for that price. I will have to look closer to the time of my arrival back in SA
 
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