Foreigners finding it hard to obtain home loans

Highly qualified foreigners are finding it hard to obtain residency permits which in turn makes it hard for them to obtain South African bonds on homes.

According to Rob Lawrence, a national manager of a bond origination service, foreign national bond applications falls under three categories:

• Temporary residency permits which include the applicant’s work permits, the permit for the spouse and other documentation.

• Permanent residency permits, which are in most cases issued to foreign nationals who have been in SA with temporary permits for at least five years. Holders of this permit can apply for a South African identity document which will show that they are non-South African citizens. This document confers on them the same rights to mortgage loans as apply to bona fide South Africans – which means that such people are not restricted, as are most foreigners, to a 50% loan.  

• South African citizenship. If and when a foreign national who has qualified for permanent residency renounces his previous citizenship, he can attain SA citizenship.  However, if his country of origin allows dual citizenship, he can hold that citizenship as well as a South African citizenship.

To get a bond the foreign applicant, says Lawrence, has to have a valid work permit, which must be stamped in his/her passport.

What is more, said Lawrence, the work permit has to have at least three years remaining before its renewal date, in order to qualify the applicant for a bond.

Even if, however, the applicant has all this documentation in place, he will still be unable to get nearly the full loan amount on his prospective purchase because, as indicated, most banks limit the Loan to Value (LTV) to 50% despite the applicant’s salary being credited to a SA bank account.

Those foreigners who believe they qualify as bona fide refugees, said Lawrence, face even greater difficulties in qualifying for a bond, their first and possibly most difficult challenge being to get the coveted refugee maroon identity document which has to be renewed every two years
The whole business of trying to assist such people – and thereby assist South Africa – is, said Lawrence, made more difficult by inefficiencies and very lengthy delays at the Home Affairs office.  These are encountered not only on first time permit applications but also on renewals, which can take more than a year to be approved by the Department of Home Affairs.

In one case, he said, a qualified female mining engineer holding a unique level of excellence achieved by only one other person in the world had been “blocked” for eight months, despite having an employment contract with Gencor.

In another case, a USA professor in virology could not get a work permit for six months, even though he is a recognised international expert in AIDS treatment.

“South Africa,” said Lawrence, “is desperately short of qualified people genuinely able to help us attain higher growth.  We should be trying a great deal harder to assimilate them – and to assist them in becoming home owners.”

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