OOBA Home Loan for Non-South Africans Res
Looking for a BOND but you are a foreigner residing in South Africa? OOBA home loan can assist you to apply. Over 90% approval rates! TRY NOW
OOBA are the home loan experts in South Africa and can assist you with your home loan application. Here is some information on buying a property in South Africa as a foreign buyer or non-resident.
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South Africa follows a system of land registration where every piece of land is reflected on a diagram and ownership recorded in one of the regionally located Deeds Registries where documents are available for public viewing. South Africa is reputed to have one of the best deeds registration systems worldwide with an exceptional degree of accuracy and of tenure being granted. Property can be owned individually, jointly in undivided shares or by an entity such as a company, close corporation or trust or a similar entity registered outside South Africa.
Foreigners are referred to as non-residents, whether they be natural persons or legal entities whose normal place of residence, domicile or registration is outside the common monetary area of South Africa. There are certain restrictions on property ownership by non-residents and illegal aliens are prohibited from owning immovable property within South Africa. There are also certain procedures and requirements which must be complied with in certain circumstances, such as the local registration of entities registered outside of South Africa where it purchases a property in South Africa as well as the appointment of a South African resident public officer on behalf of a local company whose shares are owned by a non-resident.
How to Apply
Negotiating a home loan can be a complicated and time-consuming process. This is when you need the experts on your side. Apply for a bond through ooba. We know the banks, understand the system and will hunt down the best deal for you. Since 1998, ooba has secured more than R200 billion in home loans for our clients. We’re skilled negotiators and masters at presenting your application in the best possible way. Several banks compete for your business. That can only mean a better deal. And a better chance of home loan approval. Dealing with an expert, means your life stays simple. A streamlined home loan approval process, with no duplication of forms. We’ll take the scissors to the red tape, magnify the fine print, and get you the best deal, quickly. We know our stuff, so you don’t have to worry. Independent. Straight-talking. And for free. Ask one of our home finance experts to call you back.
To Apply find our contact details below or visit our direct website to apply online.
Exchange Control & Tax Information for Foreign Buyers
All funds introduced from outside South Africa to acquire fixed property within South Africa may be repatriated together with any profit on resale of the property, after deduction of any capital Gains Tax payable, provided the title deed of the property has been endorsed “non-resident”. Similarly, funds introduced to acquire shares in a company / members interest in a close corporation may be repatriated together with any profit on resale, provided the relevant securities have been endorsed “non-resident”. Funds introduced into South Africa in the form of foreign loan to find acquisitions of corporate entities which own property in South Africa, may be repatriated in terms of the original loan approval by the Reserve Bank. The profit on resale may also be repatriated, provided the relevant securities have been endorsed “non-resident”.
South Africa follows a revenue based income tax system meaning that income earned from a South African source will be subject to ordinary income tax. Accordingly, any rental earned by non-resident in respect of South African properties will be subject to income tax and it is the responsibility of the non-resident to register as a South African tax payer.
Income earned by natural persons below R27 000 per annum (for persons under the age of 65) and R42 640 (for persons above the age of 65) is exempt from income tax, whilst all income earned over and above the aforesaid amounts will be taxed at a marginal rate applicable to that non-resident.
Corporate entities are subject to a tax rate of 30% of each Rand of taxable income whilst the equivalent rate for a trust is 40%. Non-resident companies are taxed at a rate of 35% but are exempt from Secondary tax on companies (STC) in respect of dividends paid.
Capital Gains Tax (CGT)
Non-residents are only liable to pay CGT on the disposal of the following :
Immovable property situated in South Africa, including any right or interest in immovable property.
Assets of a permanent establishment of a non-resident through which trade is carried on in South Africa.
CGT is payable in the year in which the asset is disposed of and is calculated by adding 25% of the capital gain, or profit, to the individuals income for that year and taxing that income that the individuals marginal rate of income tax. The maximum marginal income tax rate for individuals in South Africa is presently 40%. The capital gain is calculated and disclosed in the individual’s income tax return for the year in which it is sold. Thus, if a non-resident disposes of an immovable property in any year of assessment and is not already registered as a South African taxpayer, he or she will have to register as such and submit an income tax return reflecting the calculation of the capital gain and will be liable for the payment of CGT on that gain.
South African residents do not pay CGT on the first R1 million of profit made on the disposal of their primary residence. However, non – residents will not qualify for this exemption if there primary residence is not in South Africa.
Financial Assistance for Foreign Buyers
There are certain restrictions on non-residents wishing to purchase property in South Africa. The non-resident may borrow up to a maximum of 100% of his/her borrowing base. The Borrowing base of a non-resident individual is the sum introduced into South Africa to fund the purchase of a property, i.e. 50% of the purchase price. E.g. – A non-resident wishes to purchase a property in South Africa for ZAR600,000.00. Provided ZAR300 000.00 is introduced into South Africa to effect the purchase he / she would be able to apply to the South African Reserve bank for permission to avail himself of a bond of ZAR300 000.00. In other words banks will lend up to 50% of the purchase price, subject to their normal terms and conditions, which would include a valuation of the property.
Technically, if a non-resident has consistently brought funds into the country over a number of years, he/she may borrow up to a maximum of 100% of the total funds invested in South Africa. Theoretically this could also be more than 50% of the purchase price of the property.
These non-resident loans are however subject to foreign exchange approval from the South African Reserve bank. Financial assistance is granted in the form of a loan secured by a mortgage bond to be registered in favour of the bank granting the loan. ooba can apply to all the major financial institutions in South Africa on your behalf, for a mortgage bond, thereby obtaining the most competitive package on your behalf. This is a free service and no fee is charged. The obtaining of financial assistance from a financial institution should be included in the agreement of Sale as a suspensive condition where the sale is subject to the receiving of financial assistance.
The Non-resident does not have to open a banking account in SA with a commercial bank, although some banks insist, as he/she can transfer funds directly from his overseas account into his Mortgage Account. If an account is to be opened, especially if an access facility is required for the capital paid off, then the non-resident is required to obtain an original letter of credibility from his bankers. This local account will often be funded from abroad or from rental income from the property purchased, subject to the bank holding the account being in possession of a copy of the rental agreement.
As Exchange control is a complex subject, Non Residents are advised to consult with our ooba Home Finance Experts on this issue.
Temporary residents / foreign nationals
Foreign Nationals (temporary residents) may apply for local financial assistance, including a mortgage bond for the purchase of residential property. Such a mortgage bond is not restricted and depending on the standing of the client can be 50% of the purchase price of the property. The granting of any borrowing facility is subject to the approval of the Lending Manager in the Branch of the bank where the foreign national holds his / her account. It is important to note that when a foreign national departs the Republic of South Africa, the criteria for Non-Resident purchasers will apply and the bond may have to be reduced to fall in line with the South African Reserve Bank’s formula requirements. Please talk to one of our experienced ooba Home Finance Experts to facilitate you with your application for bond finance.
South African Residents working abroad
For South African residents, working abroad, a 50 – 70% mortgage bond can be obtained. Most banks will consider granting up to a 70% loan but each application will be evaluated on individual merit. Some clients have been granted 100% finance but in exceptional circumstances. You must live abroad temporarily and plan to return to South Africa. Moreover, an application to emigrate must not have been made, nor should you have surrendered your permanent residency status in South Africa. Please speak to one of our experienced ooba Home Finance Expert to assist you in this regard.
Contract workers are regarded as South African residents for the purposes of obtaining finance in South Africa and can therefore borrow up to 100%, subject to normal income qualifying criteria.
Foreign Buyers Cost Information
The purchaser is responsible for the payment of transfer costs and the costs of registering any new mortgage bonds over the property purchased. He / she will also have to pay an inspection fee and initiation fee. Transfer costs include transfer duty and conveyancers fees. Transfer duty is calculated as a percentage of the purchase price and varies depending on the purchaser’s legal status. Conveyancers fees, charged by the attorneys for attending to the transfer and registration of mortgage bonds are calculated according to a tariff.
Bond costs are the costs incurred for raising mortgage finance. Mortgage registration fees according to a prescribed tariff are payable to the registering attorney.
Click here to access our Bond and Transfer costs calculator which will allow you to determine the costs associated with the purchase of property and those costs related to the registration of the home loan.
Visit ooba home loan
8th Floor, ooba house,
33 Bree Street
Write to us:
P.O. Box 1535
Cape Town 8000
Talk to us:
Tel: (+27 21) 481 7300
Bond & Insurance Enquiries:
Tel: 0860 00 66 22
Fax: (+27 21) 481-7387
OOBA Home Loan is the best deal for bonds especially if you are non-resident or a foreigner in South Arica!