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In South Africa, the mortgages are commonly called as Bond or Bond Payments. For non South African, it is difficult to get more than 50% of the property financed by any bank in South African bank. In most cases non-residents in South Africa may borrow a maximum of 50% of the purchase price. There are a fe woverseas lenders who may be willing to finance upto 70% of the purchase price of a property. Loans are generally in South African Rand.

What mortgage term can I expect?
Mortgages are usually arranged for a maximum term of 20 years but the most common term is 10 years. Life assurance is assessed on a case by case basis although it is strongly recommended that you take out life cover for the loan even if this is not a mandatory requirement of the lender. The interest rates in South Africa, are based on the Prime Overdraft Rate.

If considering using income from sources such as Rental, it is important to note that, South African Banks will NOT take into consideration any proposed Rental Income from the property for mortgage purposes / repayments.

How much can I borrow?
The amount you can borrow is based on your net (not gross) income, i.e. the amount you 'take home' each month. In South Africa your mortgage repayments, combined with any of your other monthly payments (such as; bank loans, maintenance, credit cards, etc.), must not exceed 35% of your monthly income, therefore the amount you can borrow is calculated on an affordability basis. See the example below:

For example, if your net (joint income if double income in the family), monthly income is US $1,000, then 35% of this is US US $350, if you have outwards payments of £50, then this leaves US $300 to spend on your, monthly South African mortgage.

Usually following are required for applying for a Mortgage in South Africa:

1. 6 months bank statement-showing proof of fund.
2. 6 months pay slip.
3. Letter showing employment while, if self employed certificate of incorporation.
4. Marriage certificate, if married.
5. A completed mortgage form
6. A signed letter of authorization of attorney usually with a black pen.

What are other Taxes and Costs?
Transfer Duty: This is charged (approximately 5% - 8% of the purchase price depending on the value of the property.

Stamp Duty: This amounts to approximately 0.2% of the mortgage amount.

Bank valuation & Arrangement Fee: Inspection fees are aproximately 0.2% of the valuation. The arrangement fee varies between 0.5% - 1.5% of the loan amount .

Real Estate Agents' Commission: This fee is normally paid by the seller and is usually 7.5% + VAT (currently 14%).

Capital Gains Tax: A relatively complicated formula resulting in the tax due on any gain made. If resident in South Africa there is a threshold of the first million ZAR profit made if this is your primary residence. Non-residents do not qualify for this if their primary residence is outside South Africa.

Note that all 'Official' documents must be signed using a BLACK Ink pen.