Refinancing a Property Explained / South Africa
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- čas přidán 2. 08. 2022
- Refinancing a Property Explained / South Africa
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DISCLAIMER: I`m not a financial advisor and hence the content of these videos are for educational and entertainment purposes only. Investing is a risk related practice and should be approached carefully.
Refinancing can seem confusing at first, hopefully this video helps a bit?
Helps a whole lot.
Helped alot thank you
This is very helpful, thank you so much Louis.
So glad to hear, thank you for watching 🙏🏻
Outstanding video, thanks.
Thanks so much for watching 💪🏻
Thank you for the video. I caught the bus a little bit late, but better late than never. I never thought of refinancing in the way you do. I will apply this method to my second deal(which is now in offer)
Awesome, I'm so glad that you were able to find this video. Not a lot of people are talking about this. Hope that going forward, it will help you build your portfolio much more.
Thanks for explaining how the process unfolds and what you have to do from the very begging if you intend to refinance. This can really help you in future to buy for investment properties without putting down any money from your pocket. Thank you once more.
Pleasure my friend. Using equity can be a great way to expand your portfolio if done correctly. The video definitely helps clarify a few important steps, so im glad you noticed. Thanks for watching
Wow really well explained thank you so much❤
Thanks Chantal, appreciate the positive feedback 🙏🏻
Great stuff my brother 🇿🇦🙌🏼💯
Thanks for watching my friend 💪🏻 🥇
Thanks allot good info
Pleasure my friend 🚀🙏🏻
Great video!👏🏼
Thank you very much Nerrisa
Great video Louis! Stumbled on your channel a few days ago and have to say, it is great seeing a South African educate us locally about all these investment property techniques.
I am looking at my first investment property next year at 25 and would be curious to know what kind of cash on cash returns these bachelor flats earn.
Would it be possible for you to do a video one of these days on this bachelor flat, including all your costs involved and how much projected revenue is expected?
All examples I see are unfortunately US based and I am currently trying to decide between an apartment or a town house as a first investment property.
Thanks for the great content, keep it up!
Hi Jean Pierre,
Thank you for your comment and welcome to the channel. I wil definitely look into making a detailed video about the bachelors flats once they are rented out and I can use accurate numbers.
Generally it all depends on your strategy, some invest for cashflow only. Then multi lets or flats will work a bit better. I personally use the BRRRR (Buy,renovate,rent, refinance, repeat) strategy. Cash on cash return will be infinite on these bachelors because I didn't use any of my own cash. ROI on the other hand will be around 10% with the latest interest rates. I like a combination of flats, and townhouses. The best advice would be to buy (whatever property you decide to buy) at a discount.
@@louisreynhardt thanks a million.
I have heard about the BRRRR method and it definitely sounds up my alley.
I look forward to future content and taking time to reply!
Wow. Awesome. All this knowledge for free. Thanks a million Louis.
My question; do you do all this (the bond and refinancing) under a company or as an individual. Just wonder if banks allow companies to do this.
Huge pleasure, gald it helps you out.
So yes you can do it in a company. I purchased within a trust and refinanced in a trust. Its a bit more admin within a seperate entity but theres alot of advantages
Thank you
Pleasure my friend 🏆
Thanks boet
👊🏻😎🙏🏻
You've just gained a new follower. I'm so glad this came up on my recommendations. Let's say u get a bond worth 1.3m for 20 years and your total repayment will be 3m if u refinance the house, and the bank pays u 1.4m the original value if the house at the time of refinancing, how do u now repay the 3m you owe the bank on that house.
Sorry if this is a dumb question but I'd really like a clarity on that. As me and my wife are busy considering refinancing 1 if our house to get another one.
Thanks in advance.
Thank you for your comment, and welcome to the channel. I hope that the content can help you grow.
There's a couple of factors , it depends if your property is completely paid of or not. Also what the remaining term is etc.
What will happen is that if you take out the whole equity amount again, you will have to
Pay back the total amount of interest again, which would be R3m.
If you only refinance R100k (1.4m - 1.3m) then your total interest amount will be around R3.2m for example.
It's quite difficult to explain via this comment. Of you have any queations feel free to pop me an email at louisreynhardt@gmail.com
Louis great video. Made things quite clear. I have a situation and would like to know your opinion. Maybe a video idea. So i purchased a property that is my main residence. I have the option to pay it off at the end of the year. Should i or is refinancing an option for purchasing more property better. If it is paid of obviously i have the monthly extra to apply for a new homeloan?
Hi Johan, thanks for watching. It all depends on your current financial position, your risk appetite and of course your age. If you are able to settle your current morgage and afford a new one that could work great for you. Refinancing is a strategy to use when you want to grow your property portfolio much faster than you would when buying and paying off property. Of course there is more risk involved. You are welcome to pop me a email should you want to chat a bit more.
Louisreynhardt@gmail.com
Hi Louis, thanks for the awesome video. Please can you elaborate on the benefit of choosing an access bond that reduces/increases your premium instead of the access bond that reduces/increases your loan term?
Pleasure my friend. So, the one reducing your loan term will keep your monthly payment the same no matter what, but tbe term will reduce. So if you park R100k in your acces bond your repayment will stay the same although you technically reduce the principal with R100k .
The other option will still have acess to the R100k but your payment will be reduced and your term will stay the same.. It just depends on whether you want to pay off the bond or keep it open to access equity for further investments. Both have benefits but it depends on your goals. I refinance and rarely want to pay off my bonds so i choose to keep a my cash flow as high as possible
@@louisreynhardt Thank you for the reply brother! I see, so in order to access the equity for down payment etc to grow your portfolio and buy more property, you would rather choose your bond repayments to reduce. Excellent Brother! Stay blessed and keep on dropping these awesome videos!
Awesome video Louis! At what point would you consider to do the Refinancing? In terms of years ownership. Like would you wait to own the property for 5 years, and only then refinance, or would you wait longer, or shorter?
Great question, I usually try to refinance after 6 to 12 months, although I won't use the money immediately. It just helps to have it available.
Hey bud, you got a video on tax implications? Or maybe how to handle SARS docs and so on when you start owning more and more properties? Cheers!
Hey man, not at the moment. I will look into this And see if I can educate on this. Thanks for the suggestion.
@louisreynhardt also looking forward to tax compliance side of property investment, thank you.
Great video Louis, I have been looking for this information for a long time I finally found it. I'm think of refinancing my property, I'm owing bank 350k and my property worth 1.3 Million. I think thjs can help me to buy another property.
Releasing the equity can definitely make it possible to buy another property. If you have an access bond, you can get the money without a refinance
How?
Great video Louis💪 I've learned so much from your channel! You are the type of guy I would like to have a beer with, but I don't drink, so I will have non-alcoholic beer.
What are your thoughts on buying new flats/apartments? I currently own a Balwin Development property and have a bit of capital and I'm thinking of investing in a new Balwin Development and potentially acquiring a couple investment apartments and put those out to rent. My current property had gone up in 3 years, purchase price is R879k and it's worth around R1.1m. This has been my motivation for wanting to invest in a Balwin Development again. What are your thoughts?
Thanks alot for your possitve feedback and thank you for supporting the channel.
I would suggest watching this video. I hope that it can give you a different perspective. Feel free to comment on that video if anything is unclear.
czcams.com/video/46j6iqxGthY/video.html
Please also consider my property course as it holds a lot of value and important information. This is the best way to learn all the necessary skills to be a successful investor.There is also a mentoring option available which is the most popular option.
To secure your spot, simply click payhip.com/LouisReynhardt and follow the easy registration process.
Great video Louis, i didn't know i can register my property for more than the purchase price, i bought my house for R416000 in 2012 and i didn't do an extention and renovations on it and according to my current municipality evaluation the property is worth, R1.1m, and i want to ask for refinancing to buy another house that is worth R850 000, now my 1st Question . How do i register my current property for the current value, and so you think after registration i can qualify for the house worth that much. As the second property i want to buy i want to turn it into a commune and rent it out. Please advise how do i go about achieving my dream of being properties owner.
Thanks for watching. Yes, you can. Theres just a couple of key points you need to be aware of . You can watch this video. It should answer your questions
czcams.com/video/P64KVoWqkC4/video.html
Hi Louis, great videos. I'm just wondering about registering the property for more than the purchase price. I had not idea this was an option? I just assumed it had to be registered for the purchase price. Is this just an instruction to the conveyancing attorneys who are doing the registration? Is there a limit to how much you can register the property for?
Thanks for watching.
Yes, simply put this is something you tell your bond originator or conveyancer. There is, however, a market cap to every property, so you need to register it for a realistic amount. A property listed for R600k that is bought for R500k can, for example, be registered at R700k, creating around R200k equity. It's always a good idea to get a report on the property and determine the maximum amount it can be sold for. ( I always do renovations, which increase the value aswell) this is known as forced equity. Hope this helps 🙏🏻
From my knowledge, Standard Bank only allows you to register the property for more than its purchase price after one year of ownership. The max they will register a new bond for is the purchase price +5% (105%). You will only have access to an access bond when your loan amount is 100% or less than the total bond amount.
Thank you @Louis Reynhardt for the info, very informative. I have one question, so if you didn't register your bond with a future value and then decide to refinance. Will the Bond registration Attorney charge you the difference between the purchase and future value when registering the higher value i.e future value or what?
Thats correct, you've noticed something very important. If you dont register it for the future value and eventually you want to refinance, you will have to register a NEW bond which will cost quite alot. It wont be just for the difference. Thats why its very important to watch this video and indersrand the concept.
@@louisreynhardt thank you, understood. You are teaching us a lot. I'm a new subbie, and I'm binging in your channel. Great content sir, thank you once again👏👏👏
Thanks a million for all the great videos. 1 question though, if you did not register at the time for future value, but the market is higher than the purchase price. Will refinancing still be possible?@@louisreynhardt
@brunopinto8874 Great question. It will be possible but you will have to pay the registration fees again. The best way to figure this out is to speak with an attorney and ask them what the cost will be for your specific example. I.e getting a quote on the cost
Hi Louis, If the morgage loan is all you can afford, how does the refinancing equity help you beyeond maintenance and unforseen issues?
You only have to pay for the amount on the refinance that you use. So if you don’t use i, your bond will stay the same.It's powerful when you use it to buy more deals that will cover the shortfall you will get when using the refinanced amount. I.E. It's simply leverage that you can use to buy more properties
Thanks again Louis for all the advice. Just to get a better understanding. I bought an investment property about a year ago. Bought for R520, market value is R560 but bonded for R600 with a future loan option. What advice would give to get to refinance or get access to the additional funds? Need more clarity on this please.
The important part is that the property is registered for more than its worth, meaning you can actually get access to the equity. You can go directly to the bank where the loan is at, or I would recommend a bond originator to help you with the process. It might be a good idea to read all the terms of the future loan as every bank has different terms.🙏🏻
@@louisreynhardt thank you !
Hi Louis , I have a multilet property that I’m looking to refinance. Is there a bond originator you would recommend to assist with this process?
Thats great, you can use any bond originator. Preferably the one that helped you secure the initial bond. Some examples are my home loans or better bond. Just make sure the person helping you understands your needs.
Would you recommend fixing or choosing a variable rate with the current economy?
I will always take a variable rate. You should never fix an interest rate when the interest rates are high (like it is now) i also think that you can only get a 2 year fixed rate in SA.
Thanks bro, still not sure how to fill the OTP with 3 different prices, The value, actual price I'm paying and bond and deposit. I already convinced the seller that their house is not worth a particular amount and they've agreed and come down to my price, now asking them to sign the offer with their original price so I can submit to the bank might be tricky. I'm still learning and I'm sure I will get there😂
Great stuff. As long as you keep learning.
The OTP will only consist of the Offer price ( the price tou are willing to pay for the property) if you want to put down a deposit there is a part on the OTP to indicate that. I always try for 100% finance with no deposit.
The value of the property you will indicate to the person helping you to register the bond. I would suggest using a bond originator ( they offer a free service) so its wise to use them. They can help you with all the necesary documents. When you submit your offer after it has been accepted to your bond originator they will try to get finance from the bank. Then you will explain that you want to register the property for more than your offer price. Hope this helps
@@louisreynhardt Awesome, now I got it. I use a bond originator for all my deals but didn't indicate this in my last 3 deals. The latest one is already with the bank awaiting final approval. Going forward, great lesson learned. You're my official teacher,
Congratulations on all the previous deals. Keep hustling 💪🏻 thanks for supporting the channel. Glad you learned something
💯🙏🏼👏🏼
🙏🏻😁
Hello, I would like to know how you would extract equity from a property that was never bonded but has a tittle deed
1 of 2 ways, either refinance it ( pay registrations cost) or sell it and pay commission and taxes. I will choose the first option . Pop me an email at louisreynhardt@gmail.com if you have any questions
@@louisreynhardt thanks, will do..
Hi, When you purchase through a bond a property for example 500k and the value it 600k, how do you register the property at the 600k as all of this process are done by the bond and transfer attorney? Do you just ask them or what are the steps?
Yes exactly. You just tell your bond originator or attorneys to register the property at the higher amount
Just confirm it with your final grant.
Good day I always thought that you need to register a new bond when u refinance however you mention that it will not be necessary using the method you are teaching on the video but I still do not understand how a new bond will not be registered if you may clarify please it would be appreciated
There's a difference between Refinance and a further bond/loan.
A further loan will mean you have to pay registration again.
A refinance you won't have to, but you will have to clarify that you want to register the bond for more on the initial bond registration process. This part is crucial to a refinance
If you do not understand you can alwasy schedule a session witj me or try yo google it a bit .
Hope this helps 🙏🏻
@@louisreynhardt Alright makes sense thank you very much. The key is to registering the bond for more than the purchase price on the initial registration.
Do all the handy work yourself? Do you have some construction background?
I did most of the easy stuff. I have no background in construction what so ever. Just a willingness to learn.
Hi Louis, will it be worth it to go back and try register your property for its original value (2 years later)
Absolutely, you will just have to consider the cost involved. You can also register it for a bit more than the original value 💪🏻
Pls tell us about a property above 1 million and SARS tax. How does it work and how much is paid?
I'll look into making a video about this 💪🏻💪🏻thanks for watching
Hi, this isn't related to property but how can you invest in Vanguard as a South African?
Hi Savannah,
Luckily you can invest using Easy Equities ( have a look at some of my other videos where I talk about the platform)
You can transfer money from your ZAR account and exchange it to USD, then you can buy any of the Vangaurd funds. Im assuming you want to invest in the S&P 500 Vangaurd?
Amazing video, if you register a house for its selling price eg 800k. And you later accumulate equity of R100k maybe in the next 3 years. When you borrow that money. Will your home loan go back to 800k or the equity also consider appreciation value?
Good question, in your comment the answer would be yes. But That is called a further loan and not a refinance. I would not suggest this.
In this video I made, the idea would be to buy a Property for R800k that is worth R900k. You then register it for R900k although you only paid R800k. That means you automatically sit with R100k equity in the deal. Later on you can refinance the property and get access to the R100k. When you get access to the R100k you new bond amount will be R900k and not R800k anymore. So basicly your monthly payment will go up but you now have acess to R100k.
Great stuff man
Thanks my brother
HI@@louisreynhardt Is it then beneficial to up your debt? Because this could spiral in a big debt trap if you have multiple properties funding each other?
Hi Louis, if i bought a new property and did not register it for future value, will it be wise to wait a longer period to refinance.I have the property for one year now.Regards
If you bought it for a disscount you can wait around 6 months. Just remember you will pay the higher registration cost again. Some banks like absa have a future loan value added to their home loans.
If not, you can do some small renovation and wait 12 months and try to refinance. Just make sure your after repair value is realistic and you should be successful.
@@louisreynhardt I bought Plot and Plan and while building we upgraded alot of fittings and extras paying cash so this should increase the value after geting my home revaluated and this way unlocking equity when refinancing.
How do you determine the refinancing amount?
Use TPN or valuation reports/ experience combined with estate agents knowledge and knowing the area. I always register around R150k above listing price and always buy below listing price.
Does refinancing and registering the property at future value still apply when you are already getting a future use amount (which can be accessed after 6 months, subject to credit checks) with banks these days?
Great question, The future use is the same principle. So yes, it will affect the refinancing because if there is no equity available or left , they won't lend you any more money.
@louisreynhardt Ah good to know. I was under the impression that I could just have a new valuation done on the property, assuming I added value with renovations and then use this new increased valuation to obtain my future use amount. Is this not how works?
Thanks for always responding. We appreciate you.
@Sarj7 its a pleasure!
You are right , that is how it works. But your future use amount is capped to a certain amount. Maybe I misunderstood the question, but you can do either or, but not both.
If you have equity available you can refinance or get access to the future use amount but once you refinanced or once you have access to the future use amount you wont be able to draw more equity if there is no equity left. Haha, I hope this makes sense.
@louisreynhardt yes yes, I am on the same page then lol. Cheers man 🤝
Where do you check what your property's registered value is?
You can use platforms like Property 24, TPN or LIGHTSTONE . I prefer TPN
@@louisreynhardt I checked TPN on my property, but it only has the previous owner's details on it, not mine. Registration went through in December last year
Is it advisable to refinance a property and then take a portion of the equity and reinvest it in the same property?
What you can do is you can take the refinance amount(EQUITY) and pay it into your home loans access bond. Meaning you have access to that money for future investments. This means that you have access to the equity without having to sell the property
The idea would be to access the money and reinvest it into a different property.
Good day quick question. When I want to register a property on a company name do I fill in my details on the OTP or do I complete the OTP with the company's details
Morning, you will have to fill in all the companies details. This is very important
@@louisreynhardt Thank you
Can I refinance a property that I have demolished and added units in it?
You should be able to. The bank will probably send someone out to evaluate the property first. If you registered the property for more than its worth it should be a smooth process.
Hi! Can vacant land be refinanced?
Unfortunately, not as far as I know. You also can't finance just land. You will have to put koney down. You will be able to refinance if you made some improvements or if you have a lot of money in the deal.
@@louisreynhardt Thanks for the info
Good Day Sir, May I know if you are available for a Collaboration? Thank you and have a nice day!
I wanna learn more about Real estate, can I work for you for free. Just for me to expose myself to the world of real estate
Hey man thanks for putting yourself outthere . Where are you located ?
@@louisreynhardt current in JHB but I'll be flying to cape Town in less than a month
What custom analysis sheets comes with a subscription to your channel for the R20 p month fee? @louisreaynhardt
You get access to my propery sheet and all the stock investment sheets as well as a discount code to my property course