Buy To Let Explained How much can you afford to borrow?
Buy To Let Explained
How much can you afford to borrow?
The amount you will be able to borrow is based on your individual creditworthiness, ability and willingness to repay the loan and on your personal circumstances. Generally, your existing loan repayments and the repayments on the new Buy To Let property should not exceed 30% of your joint gross monthly income. This means that the income of your spouse or partner, who must be party to the transaction, will also be taken into account. As a guideline, if you put down a deposit of at least 10% of the property value, up to 40% of the potential rental income from the Buy To Let property will also be included when determining the amount of your maximum monthly repayments.
To qualify for a Nedbank Buy To Let loan your minimum joint gross monthly income must be at least R30 000 per month.
The above guidelines are flexible and any well-motivated application will be considered.
The following graphs will enable you to easily work out an approximation of:
• your maximum loan amount based on your income and rental income; and
• your monthly repayment.
Figure 2 illustrates the maximum income available for loan repaymens and is calculated as 30% of your joint gross monthly income. For instance, assuming a loan term of 20 years and an interest rate of 16%, if you earn R40 000 per month, your maximum loan amount would be R860 000. Your loan payments would be R12 000,
In the case of a deposit of at least 10%, figure 3 illustrates the deemed additional rental income amount that is taken into consideration when determining your maximum Nedbank Buy To Let loan amount As a guideline, the deemed monthly rental income is assumed to be 1% of the property market value. Forty per cent of the deemed rental income is then added to your monthly income to determine your Nedbank Buy To Let loan amount For example, if you were to purchase an investment property of R500 000, the deemed potential rental income would be R5 000 per month.