Eish, Why Won't the Bank Give Me Another Bond?
Eish, why won't the bank give me another bond?
Usually because your affordability is used up. Banks assess every bond in your name against one income, so after property two or three, the slice of salary available for repayments is full, however reliably your tenants pay. Credit history, valuation and paperwork matter too. Buying through a company doesn't take you out of the assessment, but the bank also weighs what the property earns.
I know the feeling from the inside. And for a while, I thought it was me.
My soft-no years
Around 2015, 2016, the banks started making it hard. A couple said an outright no in some of the areas I was looking at. Most of them didn't say no at all. They just made yes very difficult: no 100% bond, a higher interest rate, more paperwork, more waiting. A no dressed up as a maybe.
I'll be honest, I went into victim mode for a bit. You get into your head. Why me?
And I was doing it the slow way without realising. Every property was in my own name, so I'd buy one, fix it up, sell it, wait for my bond affordability to free up, then go again. Sequential, not parallel. The deals were there. My payslip decided when I was allowed to do the next one.
Why does the bank keep saying no?
Most of the time it's one of five things:
Your credit record. Recent late payments still count.
What you already owe. Car, cards, store accounts, and every bond already in your name.
The valuation. If the bank values the property below your price, you fund the gap.
The property. Some buildings, conditions and areas a bank won't lend on. I learnt that one on a flip in Walkerville: nice houses, but the banks weren't keen on buyers in that area, and my buyer's bond fell through.
How the application arrives. Missing documents or unclear income can be enough for a no.
For investors, number 2 is the wall. Banks generally won't let bond repayments go much past about a third of gross income. Your home, rental one, rental two: every repayment comes out of that same slice.
Ja, but doesn't the rent count?
It can help, but in your own name the rental and its bond sit on your personal application, stacked on your payslip. Banks typically treat rental income cautiously. When the slice is full, the answer is no, however good the deal.
The setup that moved my ceiling is what the Directors Fortress walks you through. R99 once off. Start here
What changed for me?
My first purchase inside a company went better than I expected. The bank funded 100% on that one, at a good rate. That isn't the norm, and the costs still had to be paid, but it showed me the difference.
I still signed surety. The bank still looked at me.
But the property was assessed with what it earned on the scale, not just as another line on my personal application.
The deals were always there. The ceiling just stopped being only mine.
That's not a promise it'll work the same for everyone. Banks differ, and every deal stands on its own. But it's why I stopped seeing a soft no as a verdict on me.
Okay, so what can you do now?
Fix what you can fix. Clean up your credit and pay down short-term debt.
Bring a stronger application. A well-bought deal, verified rent and clean paperwork. By my third company purchase I kept a ready-made document pack on my PC.
Use an originator who knows how to present an investor, and an entity, to a bank.
Decide the container for the next one. If you plan to keep buying, consider buying the next property in a company.
What I'd watch for
Surety is real. Company debt you sign surety for can reach you.
No structure makes approval certain. The deal still has to make sense.
Moving existing properties is a separate project. It involves your current bank's consent, transfer costs and tax advice.
FAQ
Why was my second home loan declined when my tenant pays the bond?
Because your existing bond and debts already use most of your affordability, and banks generally treat rental income cautiously on a personal application.
How long should I wait before applying for another bond?
There's no set time. What changes the answer is your affordability, your credit record and the strength of the deal.
Will buying in a company get me approved?
Not automatically. You'll usually still sign surety and be assessed yourself, but the bank also weighs what the property earns.
Stop hearing "not yet"
The Directors Fortress shows you how to set up the company and buy in it. R99 once off.
Already own property and hitting the ceiling? Book a one-on-one with Michael: zahomes.co.za/strategy-call
Education only. This article is general information, not tax, legal or financial advice. Speak to a registered tax practitioner, attorney or financial adviser about your own situation.
About the author
Michael Bowen co-founded ZAHomes. He bought his first property in 2003 on the outskirts of Amsterdam, with a 100% mortgage, at the wrong point in the cycle, and lost over €14,000 on it while sanding the floors himself in a heatwave. Twenty-odd years, 40-odd countries and a lot of property school fees later, he lives in Cape Town and teaches South Africans to buy and hold property inside a company. His view hasn't changed: an investor's greatest assets are the lessons from their failed deals.
