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How foreigners can get a home loan in South Africa

Paying a deposit makes everyone involved in the deal breathe a little easier.

Home Loans for Foreigners in South Africa

Article summary

  • Foreigners can invest in property in South Africa as individuals, through joint ownership or by acquiring shares in an entity that owns property.
  • Non-residents must transfer 50% of the purchase price or balance of purchase price, via the Reserve Bank, from their own foreign bank to a South African bank account.
  • A local bank guarantee for the purchase price is necessary if the funds are remitted to South Africa. Otherwise arrangements must be made with the foreign bank and a local bank for a back-to-back guarantee.
  • All foreigners, specifically non-residents, must invest one rand in the country for every rand they need to borrow.

“Foreigners not resident in South Africa, who are keen to invest in property here, can do so individually or jointly, or by acquiring shares in a company that is the registered owner of a property,” says home finance specialist Yvonne Viljoen.

These are her top tips for foreigners not resident in South Africa, who wish to invest in property here:

  1. If you buy property through an estate agent, they must be a registered member of the Estate Agency Affairs Board with a valid Fidelity Fund Certificate.
  2. Once you make an Offer to Purchase and it is accepted, an Agreement of Sale will be drawn up for the buyer, seller and two witnesses to sign. This contract is legally binding. If either the buyer or seller cancels the agreement at the 11th hour, they can be sued for expenses incurred, such as wasted legal fees.
  3. Both the offer to purchase and the agreement of sale needs to be fully understood before they are signed and submitted. It’s best to seek independent legal advice if anything is unclear.
  4. Property in South Africa is sold voetstoets, or “as is”. However, the buyer must be informed of all patent and latent defects in the property.
  5. Fixtures and fittings are automatically included in the sale of the property. For clarity, these can be listed in the agreement of sale.
  6. Electrical and beetle certificates are required to confirm that the electrical installation is compliant with statutory requirements and that the property is not infested by certain beetles. (The latter certificate is usually only compulsory in coastal regions.) Some regions require plumbing and gas certificates.
  7. All foreigners not resident or domiciled in South Africa must invest one rand in the country for every rand they need to borrow.
  8. Because non-residents are only able to raise a 50% bond, they need a 50% deposit. Alternatively they can pay cash and introduce the full amount into South Africa via the Reserve Bank. The buyer will have to provide a guarantee issued by a local financial institution for the balance of the purchase price. In order for a local bank to issue that guarantee, the funds will have to be remitted to South Africa via the Reserve Bank, otherwise arrangements must be made between a foreign and local bank for a back-to-back guarantee. It is possible to negotiate a standby letter of credit from an overseas institution in certain circumstances.
  9. Non-residents must transfer 50% of the purchase price or balance of purchase price, via the Reserve Bank, from their own foreign bank to a South African bank account.

Browse ooba’s home loan calculators to work out bond affordability and bond repayments. South Africa’s leading home loan comparison service is geared to assist foreign buyers in this process.

The best way to assess your chances of getting a bond is by using ooba’s free, online prequalification tool, the ooba Bond Indicator. This will help you work out the price range you can afford, based on your net monthly income and credit score.

How much can you afford?

Calculate the home loan you are likely to qualify for and how much you can expect to pay monthly on your bond repayments.

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