Looking to make an investment in a property? Homeloan Junction can assist you with a buy-to-let home loan. We are available online and our website has calculators and information to help you make a decision.
There could be a number of reasons to be thinking along these lines:
- the kids will soon need accommodation while attending Varsity – so buy now and rent it out while they get on with passing matric;
- perhaps granny needs to move into an apartment but needs time to get around to accepting the fact – buy now and rent it out until she gets used to the idea;
- maybe looking to provide extra rental income each month for when you retire is the way to go. By using a buy-to-let home loan and allowing the rental to pay for the apartment you will eventually have a steady income when the mortgage is paid off.
What’s A Buy-to-Let Home Loan?
It is exactly what it says it is! It is a home loan to enable you to purchase a property with the intention of leasing it out, and not to live in it at that time. It is a long-term investment with eventual benefits. It can provide additional income for retirement or be used to finance your children’s further education by having an asset against which to raise finance.
What? Where? When?
1. What: As seen elsewhere in the world, the property market has seen ups and downs but as a long- term investment, property is a sound choice. Good returns have been experienced by the rental market in South Africa. Smaller homes in the middle to lower price range are soughtafter as rental properties. This pinpoints those who are not yet able to afford their own property. Sectional title, flats and apartments are exceptionally popular and always in demand – especially smaller apartments in the bigger cities.
2.Where: If you intend buying an apartment to eventually live in, or for the children when they attend University, the choice of where to buy is narrowed down. When purchasing an apartment to rent out, it would be best to consider an area with has a high requirement for rentals which will see it fully rented out. As mentioned, the bigger cities project the biggest demand and enjoy the higher rentals.
The northern areas of Johannesburg are the most popular neighbourhoods to look at when wanting to apply for a buy-to-let home loan to purchase an apartment. Areas to consider are Parkhurst, Parktown, Parkview, Hyde Park, Houghton, Melrose, Sandhurst, Saxonwold, Illovo, Inanda and Dunkeld. Students always require accommodation so other areas to consider are in reasonable proximity to the Universities.
Cape Town is always popular with tourists and its wonderful beaches, mountains, wine estates and upmarket residential areas are appealing. You can’t go wrong when buying in one of the following Cape Town neighbourhoods: Bantry Bay, Bakoven, Fresnaye, Green Point, Mouille Point, Camps Bay or Clifton. City Bowl is also a sought after area and growing in popularity. The cosmopolitan lifestyle enjoyed in Cape Town is a huge draw card to one of the most constant property markets.
3.When: The sooner the better! There is no time like the present. Remember, we said it is a long-term project and investment so best get started now.
Here’s a checklist of things to bear in mind when you buy that apartment:
It would be practical to consult with your accountant as to what the tax implications could be with the acquisition of a new property. They will advise you at which rate you will be taxed with the rental considered as additional income; what to expect in view of capital gains tax and if there are any tax deductions that could be applied.
The less you borrow as a buy-to-let home loan, the greater your eventual profit will be.
Comprehensive investigation into your investment is a must to ensure you make an informed decision based on sound advice. This is where your estate agent and bond originator can be invaluable. Do you require a deposit? What is the interest rate expected to be? Is the neighbourhood safe and settled? Knowing the average rental in the area will indicate what you could expect as a return.
Choose a property that is in relatively good condition as you do not need to pay for extensive repairs. Cosmetic improvements, such as repainting and garden improvements, is always a worthwhile exercise.
Weigh up the advantages of a loan over a shorter term with a higher monthly payment, opposed to a lesser amount over a longer period of time. Inquire if the loan can be repaid sooner than the agreed period, and if so, what penalties will be incurred.
Our home loan expert will be happy to guide you through your application for your buy-to let homeloan. This service is provided free of charge and will save you time and stress allowing you more time to dwell on becoming the proud new owner of an apartment. Get in Touch with us for more details