Mortgage Bond Qualifying Criteria for Non-Residents
Date: 2006-09-27
This is a long overdue and an often-requested topic. Many overseas investors would love to own property in Sunny South Africa, but are hesitant as they are unfamiliar with local banks qualifying criteria on mortgage bond finance. We therefore endeavour to give you some valuable guidelines and hope to shed some light on this issue.
General Requirements
- Proof of Identity, be it a foreign passport with relevant endorsements (visas, work permits, residency status) or a copy of your SA ID book.
- Proof of Income:
- For salaried individuals, the employment contract indicating the employer, income and the contract term, a copy of the pay slip and 3 months bank statements reflecting your net salary as deposited.
- For self-employed entrepreneurs, the banks require financial statements of your organization. If they are older than 6 months, they must be supported by management accounts. Furthermore, copies of 6 months personal and business bank statements will have to be submitted with your application.
- Where the property is to be leased, a copy of the lease agreement.
- Title deed or offer to purchase.
Foreign Nationals Temporarily Residing in South Africa
Temporary residents in South Africa m ay now qualify for up to a 100% bond for employed individuals and 80% for self-employed. However, in terms of the Exchange Control Regulations, you will be required to declare foreign assets and you will have to sign an acknowledgement stating that, prior to permanently leaving South Africa, you will reduce the amount of the loan outstanding to an equivalent of what you have invested in the property or 50% of the original purchase price. Should you not be in a position to comply with this regulation, you will be required to sell the property.
S A Residents Living Temporarily Abroad
If you’re able to submit all the required proof of income as stipulated under “general requirements” above, the banks will consider 100% bond plus costs. The installment-to-income ratio must not exceed 30%. Your local and foreign income and expenditure will be analyzed to determine your affordability, wh ich will be the superseding factor in determining the size of bond you will qualify for. Other factors that will be considered are; term of your employment contract, employment sector, length of time abroad, bank accounts held locally, intention to return, type of property.
Non-Residents
A maximum loan of 50% of the purchase price plus costs of any improvements will be considered. The balance must be paid with funds introduced from abroad. Exchange Control approval must be obtained for all non-resident applications.
I need to stress that these are merely guidelines and the criteria differ from bank to bank and from time to time. It is, therefore, imperative that you utilize the services an independent property finance consultant such as ourselves to facilitate the process for you and to guarantee the best financial deal on your property investment.
Tess Rodrigues
Managing Director