Can I Get a Home Loan With a Work Permit?

Buying a home in South Africa can be a large undertaking, especially for non-residents. As a result, many would-be homeowners take out a loan to finance their purchases. But can foreign nationals get a home loan with a work permit qualify for a home loan?

The short answer is yes. You can get a home loan even if you're on a work permit. The major requirement is that you must have been living in South Africa. You'll also need to prove that you've been earning enough money to cover your living expenses and your loan repayments. This means showing proof of income and bank statements.

What are the requirements for foreigners wanting to buy property in South Africa?

When applying for a home loan in South Africa, a few factors determine whether you would qualify. These include:

• The type of work permit you're on: Work permits come in different categories, and the qualifications needed for each category vary.
• Your length of employment in South Africa: You would typically need to have worked in SA for at least 3 months before applying for a home loan.
• Your credit history in your home country and South Africa: If you have a good credit history in your home country, chances are it will be recognized when applying for a loan in South Africa.
• The amount of money you are applying for: Your salary must be at least three times the amount of money you are applying for. Applicants with a work permit of four years or more can typically qualify for at least 50% of the listing value.

How to apply for a home loan in South Africa as a foreigner

You can apply for a home loan through a broker or any South African bank. When applying, have the following documents ready:

• A certified copy of your passport;
• Proof of residency in South Africa;
• An international credit check;
• Proof of employment in SA, such as a work permit;
• Proof of income, for example, three payslips over the last three months; and
• Bank statements showing you have access to a specific amount at least three times the amount you are applying for.

To show that you're eligible for a loan, you'll need to obtain a certificate from the South African Reserve Bank. To do this, ask your bank to help you apply for a statement of foreign income. Foreigners and non-residents or foreign nationals can apply for a loan of up to 50% of the purchase price.

However, if you have been employed in South Africa on a work permit for four years or more, you might qualify for a larger loan. Still, set aside at least 50% of the purchase price as a cash down payment.

Applying for a home loan through a South African bank

You can apply for a South African home loan at any bank, but some banks specialize in lending or offer better rates. Finding the right bank for you is crucial.

Some banks that can provide home loans are:

• Absa
• Nedbank
• Capitec
• First National Bank
• Standard Bank

If your loan is approved, the relevant bank may require you to open a bank account. The loan repayments are then deducted from that account.

Lenders to consider in South Africa

While banks are one option, there are other lenders to consider. For example, SA Home Loans is a reputable company that specializes in loans for foreigners. Like banks, SA Home Loans provides two types of home loans: fixed-rate and variable-rate home loans.

For non-residents in the country on a work permit, it is important to find a lender who understands their situation. Some home loan lenders offer services exclusively to foreigners or non-residents.

Fixed Interest Rates or Variable Interest Rates

When buying property in South Africa as a foreign national, you have a choice between fixed and variable interest rates on the loan.

Fixed interest rates have a set term, usually one to five years. After this period ends, your interest rate could be adjusted as the economy changes. This means the repayments will stay the same throughout the year, regardless of how interest rates change.

On the other hand, variable interest rates are set by the bank and can increase or decrease depending on benchmark rates in South Africa. This means your interest rate will change with the market, which will likely offer lower rates when there is an economic slump.

How to buy a home in South Africa with a work permit

So, you've got your work permit, and you're ready to buy your first home in South Africa. What's next?

First, find a reputable real estate agency or home loan provider and let them know you are a foreign national on a work permit. You can do this by searching for an estate agent near you online. Once you've chosen an agency or a mortgage loan provider, contact them and tell them you're interested in buying a house. They will ask for information about your visa, work permit, and the type of property you wish to buy.

Things to know about home loans for foreigners in South Africa

A variety of different funding options are available depending on your financial status and needs. Your real estate agent or a home loan provider can guide you through the different types of loans and help you choose one that works for you. Saving a deposit for a home loan is usually the biggest challenge for foreigners in South Africa.

The bottom line

The South African government allows foreigners to buy homes in South Africa with a work permit. A real estate agent or home loan provider can help you get a mortgage for the property you want to buy.