What is Existing Property?
Existing buildings or structures, as well as, all personal property contained therein.
How To Use Existing Property To Buy Another In South Africa
Applying for a second home loan
Even though you already own a property, you will still have to go through the same process as you would if you were a first-time home-buyer, meaning that the bank will need to evaluate your credit record, as it did the first time.
Although you may think that getting bond approval the second time around will be plain sailing, particularly if your financial situation has improved, don’t be too sure. The bank’s lending criteria may have changed in the period of time since you purchased your first home.
So even if your financial situation has improved, you should still get yourself prequalified with a home loan comparison service such as ooba home loans. The prequalification process will help you determine what you can afford.
How can your existing property help with the application process?
You may wish to sell your first home and use the equity to pay for the deposit on the second property, thus earning you a higher chance of bond approval and a more favorable interest rate.
However, there’s also the option to keep the first home in the family. You can also use the first home to generate rental income, which can, in turn, be used to pay off the bond.
Using your first home to generate rental income
Bear in mind that most banks do not take potential rental income on the property into account when assessing your bond application. However, if they do approve the home loan, the rental income you generate on the property will of course help you pay it off.
Of course, this means you’ll be paying off two home loans at the same time (unless the bond on your first home is already paid off). The bank will take this into account when evaluating your home loan application and will want proof that your expenses do not exceed your required repayments on both loans.
However, some good-to-know info is that expenses you incur on the existing property will be tax deductible if you choose to rent it out, as these are deemed by SARS as business expenses.
Shop around for the best deal
Whether you plan to use the equity from your existing home to fund a deposit on the new home or not, be sure to shop around for the best deal when applying for a home loan,
as doing so grants you a better chance of bond approval and a favorable interest rate.
How can I invest in property without money in South Africa?
You can now use other sources of finance to apply, including:
- the beneficiary’s pension/provident fund loan.
- a co-operative or community-based savings scheme, i.e. stokvel.
- the Government Employees Housing Scheme.
- any other Employer-Assisted Housing Scheme.
- an unsecured loan.
Can a mortgage be transferred to another property?
Porting a mortgage means you transfer the terms of your mortgage to a new property. That means keeping the same interest rate, fixed-rate period, and fees.