Mortgage Lending for Non-Residents versus Residents

Private Property South Africa
Denise Simpson

Denise Simpson discusses the rules that apply to non-residents and South Africans living abroad who wish to qualify for a home loan


The Reserve Bank ruling, and not the Commercial Bank ruling, for mortgage

lending for non-residents is that they can buy and mortgage property in South

Africa, but the 50% risk rule will apply. Non-residents will have to fund 50% of

the value of the property and pay for all costs that will be incurred i.e. bank

costs, transfer costs and attorney costs (normally about 8% of the property

value); the other 50% will be funded via a mortgage bond from the bank of their

choice and normal lending criteria will apply i.e. affordability, credibility

and the property offers good security.

South Africans working and living out of South Africa

There has been an increased demand for South Africans living overseas to

purchase property back home.

The Banks will lend to these individuals, but they will not lend more than 80%

of the value of the property. The reasoning behind this is that there is a

concern that when they return they will not necessarily be earning the same

income and be able to afford the home loan repayment. Once again the normal

lending criteria will still apply.

The Banks will have to be very certain of the following:

  • Stable employment

  • Employers contact details to confirm employment

  • Proof of income

  • 6 months bank statements of where salary is credited

  • Property being bonded offers good security

The Banks are flexible, but the client's profile and earnings will determine

their decision. For example, a higher risk loan will be considered in the case

of a high income earner, who with all expenses taken off, still has a low ratio

of gross income to net income.

This varies from bank to bank, but the 80% rule is the norm.

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