Question:
We are renting a house that the owner wants to sell to us for R550 000. We are paying a rental of R5000 per month, but in order to buy the house we would have to pay a lot more.

Would the bank consider letting us pay R5000 per month for, say, six years and then increase it when we can afford more?

We actually need to borrow R700 000, because we need to spend about R150 000 on renovations.

We are in our fifties and can pay the bond back over 15 years or so.

Answer:
Unfortunately they will not consider this and in any event it would be a very expensive way to finance the property. If you borrowed R700 000 over 20 years the repayment would be R9217 per month. Even if they extended it to thirty years it would still only bring it down to R8851 per month. If you borrowed what the house will cost without the renovation it would cost R7242 per month. If you say you will only be able to pay the loan back over 15 years then the payment would jump to R7697.

The only way to afford the house would be to increase your income. If the house has a spare bedroom perhaps you could consider taking in a lodger to make up the shortfall.

If you have children perhaps you could ask them to invest in the property and pay off part of the bond.

Another possibility is to go into partnership with the current owner. Buy a share in the property and when you have more money buy the other share. That way he gets some cash up front and you get a lower repayment. You could then use the money saved to put towards eventually buying the house — it’s worth a try!

It all depends on your relationship with the owner and whether the home is bonded or not.

If you borrowed R275 000 your repayment would be R3848 per month, but if rates go up by another two percent it will be R4232 per month.

If you did this, however, the renovations would have to wait.