Banks and Loan-to-value ratio
Now that the property market is falling, the banks don’t want to give 100% bonds anymore.
The current trend is as follows:
- If you borrow less than R750K you could still get a 100% bond.
- If you borrow between R750K and R2.5Mil you could get a 95% bond.
- If you borrow between R2.5Mil to R3,0Mil 90% bond.
- If you borrow between R3,0Mil and above 80% bond.
So if you want to get into the property market you will need a deposit. This could take time, so most people will rent a home. Property investors are happy about this because now their houses are being filled with tenants.
I still believe that real estate is one of the best investment vehicles over time, so I say save your money and pay your bond, not someone else’s.
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