By Dawie Bester
Buy to let is understood as buying property to rent to another. This way the property is not used for one's own residential purposes. Instead, someone else will be making use of the space or the property. In case you are unable to fund the purchasing of this property, banks are willing to provide you with home loans for this purpose. There are several banks which have buy to let home loans. If you are looking to purchase a buy o let property, ensure that you have a good idea of the kind of bank you want funding this loan.
Presently, the financial situation in countries makes it possible for individuals to opt for buy- to- let deals. The complex processes involved in the lending prerequisites created by the National Credits Act makes it a possibility. The current economic conditions is making the availability and sanctioning of home loans relatively difficult. Another aspect is that properties that are being rented out will continue to have more value even in the future. Banks currently have a large number of properties in their custody. Plenty of people are selling their homes and other properties to meet the financial demands of day to day living ever since the recession has hit. Currently, interest rates are quite low in order to facilitate a relatively more comfortable process of purchasing property.
The value of a property will determine the amount of loan that you could get and this is known as gearing. The term gearing is understood as a ratio- the ratio of the amount you are investing in the property to the amount for which your loan is approved. Current economic conditions mandate that a certain deposit has to be made before a loan is sanctioned completely. Banks offering 100% loans is a rarity. There are stringent norms that one has to go by to get approval for a buy to let property.
Certain criteria that have to be fulfilled for qualifying buy to let home loans:
Banks will check to ensure that one does not have any defaults. They also look into one's income, ability to pay the loan he/she has applied for, other debts that you have currently and one's job aspects. If the loan applicants have a joint income, then that qualifies them for a bigger loan. The minimum amount sanctioned as a loan in this case would be R 30,000 per month.
Sometimes when banks calculate the income of the loan applicant (for a buy to let loan), they consider the possible earnings from the property as part of the applicant's income. Deposits made and gearing are also considered.
When applying for a buy to let home loan, there are certain documents that you will be asked to present to the banks. It is best to be prepared with them. Some of the documents that you may be asked for are: identification proof, income proof, address proof, bank statements for three months and a copy of the document of offer to purchase. Joint loan applications have requirements unique to it.
Some additional points for consideration may be that it is best to rent your property to those who can pay you the rent, who can make the property profitable for you in the long run. Attorney fees, mortgage registration and other permits will have to be secured.
The author helps South African citizens to get Standard bank home loans approved. For more information visit http://securebonds.co.za/.
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