international mortgages
south africa
Essential information for buying properties in South Africa
Buying property abroad is not necessarily the same as buying in the UK, there is other essential information you need to be aware of both before and during your property purchase.
- It is of paramount importance to seek independent advice from an overseas solicitor.
- You need to ensure that you will have full title to the property on completion and that you have the appropriate documents available for the lender.
- Before signing the sales contract, the bank will require a copy of this document to be forwarded with the relevantapplication form. However you are able to sign this contract with the clause “subject to mortgage finance” as the contract, once signed is legally binding.
- You should check with the estate agent and/or your lawyer that you are aware of the costs charged by legal and Government authorities for buying a South African property. The lender will also have their own legal costs for assigning the loan, the cost of which they will normally advise you when they issue the mortgage offer. These associated fees/taxes are typically between 10% - 15% of the properties purchase price.
- Be aware that the solicitor or notary may be incorporating costs for assigning the mortgage within his charges, and you should establish the actual cost before proceeding with a loan application.
- Properties can be purchased individually, in joint names, or partnerships as well as through Limited Companies and Closed Corporations (CC’s). An Offer to Purchase (OTP) on a property needs to be signed in the name of the legal entity the purchaser is buying through, and Limited Companies need to be set up prior to signing the OTP.
Eligibility and criteria
- We typically arrange loans in SA Rand only
- Repayment loans are available
- The maximum loan to value for a purchase is 40% for UK and Non UK applicants
- The maximum loan to value for South Africans looking temporarily living and working overseas is 80%
- The maximum term is 20 years up to age 70
- The minimum loan amount is 500,000 Rand with no maximum
Affordability
To qualify for a mortgage in South Africa, a calculation is used to establish whether you can afford to maintain the mortgage repayments. This will automatically happen when you complete our enquiry form, and we will not charge you for this service.
Your existing liabilities, including your UK mortgage or rental payments, loans, credit card payments and maintenance are taken into account, together with the proposed South African mortgage payments. All this must not typically exceed 30% of your monthly net income. For example if your net joint income is £2500, 30% of this equates to £750. If your only liability is your current UK mortgage payment of say £300 per month, this would leave a balance of £450 for your South African mortgage repayment.
The amount that you can borrow is also restricted by the maximum loan to value as mentioned under Eligibility and criteria.
Proof of income requirements
If you are employed:
- Your last three month’s payslips
- Your latest P60 and employers reference
- Your last three month’s personal bank statements
If you are self-employed:
- Your last two year’s audited accounts, tax returns and accountants reference
- Your last 3 month’s personal bank statements
Other documents will be required and will be confirmed when application forms are sent to you.
If you would like to speak with a representative to discuss your requirements please call +(34) 677 874 948
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