Re-mortgage / Home loan leverage

J

J-10-M

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Good morning all,

I have an investment property in Cape Town that was purchased years ago for around R1.5mil, home loan was originally around R1.1mil.

Investment property is valued at around R1.8mil currently
Home loan is now around 25% paid off.
Current rental income exceeds current home loan expenses etc.

I was just wondering if it is possible to increase the current loan or take out additional debt against the property to use as a deposit / Collateral on another investment property?

Always interested in hearing peoples views.

Thanks,
 
You should be able to extend the loan on the existing property, but it will cost you bond fees etc... so factor in around R30k to get it all sorted.
 
Is it as simple as calling up the bank and asking them to increase/ extend the existing loan?

I understand that the bank will need fees again, as the limit of the original bond will be increased, they see it as opening another loan.
 
J-10-M said:
Is it as simple as calling up the bank and asking them to increase/ extend the existing loan?

I understand that the bank will need fees again, as the limit of the original bond will be increased, they see it as opening another loan.
Click to expand...

Its possible. Any bank would ask for you to complete a form (showing what you qualify currently, or rather, what you can afford). Step 1, get in contact with your homeloan department I would say

Also take into consideration, the bank wouldnt take the full rental income .... as income. (this rule differs from bank to bank).
 
Last edited:
Duly noted on the above.

Are you aware of which banks take more of the rental income into consideration?
I have read previously, varying aspects, think it was around 30% of the full rental income.
 
I just want to ask why you would want to do this? If they will extend this bond and give you another one for the separate property surely they would also give you a bigger loan on the second property and then you will only have to pay bond registration fees once?
 
Yes, I agree.

So instead of extending the current loan.
Just apply for a second loan but a 'larger' second loan.

My initial question was more around the ability to leverage current property for collateral and if it was possible - which it seems it is.
 
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