Home Loans For Foreigners Buying Property In South Africa
Home Loans For Foreigners Buying Property In South Africa
The South African property market continues to be a prime attraction for
foreign investors with the favourable exchange rate and an abundance of
luxury houses in scenic locations. Foreign investment is expected to further
increase as the economy gradually recover from Covid-19 lockdowns.
Foreigners who are not residents in South Africa, and who are keen to invest
in property, can do so individually or jointly, or by acquiring shares in a
company that is the registered owner of a property.
1. All foreigners not resident or domiciled in South Africa must invest
one rand in the country for every rand they need to borrow. The amount
foreigners or non-residents can borrow is limited to 50% of the purchase
price. Approval will be required by the exchange control authorities, which
will depend on being able to prove the introduction to South Africa of an
amount equivalent to the bond amount borrowed.
2. Banks will only fund 50% of the purchase value of the property for
non-residents so foreign investors will either need to provide a 50% deposit
or pay cash and introduce the full amount into South Africa via the Reserve
Bank to a designated bank account (which will usually be a trust account of
the transferring attorneys) with a registered South African bank.
3. The record of the deposit of the funds received from a foreign
source is referred to as a 'deal receipt' and must be retained by the
purchaser as it is required for the repatriation of funds when the property
is eventually sold.
4. If it is a joint application, at least one applicant must earn a
minimum of R25 000 per month, be eighteen years or older and have a clear
credit record.
What documents will I need when applying for a home loan as a foreign
investor?
For a full-time employee or someone employed abroad:
- A client Home Loan Interview Form, signed and dated.
- A copy of your ID or both sides of an ID Card OR a foreign or South African passport OR a work permit allowing you to work abroad.
- A Salary Advice OR a payslip for the latest six months (up to submission date).
- A copy of a full Contract of Employment.
- If applicable, your latest updated signed Lease Agreements for declared rental income and your completed rental schedule.
For a self-employed individual:
- A client Home Loan Interview Form, signed and dated.
- A copy of your passport.
- Written confirmation of your income (such as a letter from an accountant detailing income, or your latest tax return).
- A full set of Comparative Annual Financials - signed and dated.
- Six months latest (up to submission date) Personal Bank Statements.
- If applicable, your latest updated signed Lease Agreements for declared rental income and your completed rental schedule.
Applying for a home loan through a South African bank
Bond originators can or home loan consultants assist foreigners buying
property in South Africa when they apply for a bond through a South African
financial institution.
Potential buyers do not necessarily have to open a banking account with that
commercial bank, because they can transfer funds directly from their
overseas account into their home loan account.