Buy To Let

Buy to Let mortgage is a massive market in South Africa and worldwide right now. It’s one of the main reasons why property prices have sky rocketed of late. Everyone’s on the property bandwagon and trying to make money and it’s no wonder that this topic and mortgages in general are one of the most searched for property topics on google right now. Those of you looking for steady growth, Buy-to-Let is the market for you. With the current escalation in property prices, renting has become a great option in South Africa, and with all our major cities having such a large amount of students, well, that in itself covers 50% of our rental market.

Like any investment though buy to let comes with no guarantees, but for those of you that have more faith in property than in our “stable stock market” here’s an option for you! When buying to let it is important to know the market and the mortgage that you’re going for. It may be worth getting help from a letting agent who knows the area you’d like to buy into and it’s most definitely worth your while getting the right bond originator. Check what’s in demand and see what the likely pitfalls will be. By planning carefully and purchasing wisely you ought to get a property which requires little maintenance and is attractive to tenants.

Why Buy to Let Mortgages are popular
Buy to Let Mortgages Types
Buy to Let Investors

What’s so great about it you ask? Well…

What other investment:
1. The mortgage pays for itself (rental from your tenant) possibly even earning you extra income should your rental cover more
2. Grows at the current property growth rate
3. Is an investment that looks after itself
4. Once paid off is a constant monthly income – for no extra work at all
5. Good tax write off

Here’s a TOP TEN TIPS FOR BUY TO LET that I found and a great bit of advice!

Why Buy to Let Mortgages are so popular

Buy to Let mortgages are very popular in the South Africa. Why is this such a growing option?

Well for starters, Property is a great longer-term investment, especially when stock markets are so volatile.
With interest rates being so high, buy to let mortgages offer an attractive alternative investment.
With the overall South African population rising, a high divorce rate plus growing student numbers, there is plenty of demand for rental accommodation.

Banks in South Africa are now offering competitive buy to let mortgages to make life easy. Would you like to become a land lord, well then this is for you!

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Buy to Let Mortgage Types

Now for those of you that didn’t know, there’s a buy-to-let loan or mortgage type that is offered by the various banks. What this means is that you’re buying a property with the intention of renting it out! To be totally honest, when an application is submitted to the banks and you stipulate that this property is for investments purposes, that automatically puts you into the Buy-To-Let category.

There are certain criteria and options available for the buy to let mortgage loan. Unfortunately though, COSTS ARE NOT INCLUDED AND NO BANK WILL DO THIS. Banks are also rather reluctant to give you the full 100% mortgage loan with a buy to let option as this is normally not your first property. I know for a fact that ABSA bank will not give you more than 80% loan on a buy to let mortgage.

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Buy to Let Investors

There are two types of buy to let investors in South Africa. You have your common amateur investors and then you get your professional investor type.

A professional investor will have a large portfolio. This is typically the type that invests all his money in property. He would have something in excess of 3 properties to his name. Most likely something in the region of 100. Your amateur buy to let investor will have one or two properties to their names.

Whichever type of buy to let investor you are there are a couple of things that you need to remember. Get the correct financing and buy the RIGHT property.