Buying & Selling

Mortgages and home loans in South Africa

Expats looking to buy a home in South Africa are eligible for home loans without restrictions. Discover the types of mortgages available and how to apply.

mortgages in South Africa

By Stephen Maunder

Updated 16-1-2024

South Africa’s biggest banks offer mortgages to immigrants, including fixed-rate and variable deals. There are, however, limits on how much foreign buyers can borrow when purchasing a South African property.

Learn more about the application process, which mortgages are available, and what fees you can expect to pay by exploring the following topics:

Mortgages in South Africa

In 2021, around 69.7% of households owned their homes, while 18.75% rented. An estimated six in 10 property purchases in South Africa were made with a mortgage, commonly called ‘bonds’ or ‘housing bonds.’

Friends/family celebrating in a living area of a home, seeing them from outside
Cape Town (Photo: Klaus Vedfelt/Getty Images)

Data from the Centre for Affordable Housing Finance in Africa (CAHF) shows around 2.28 million families have mortgages in South Africa, with about 30,000 new mortgages granted quarterly.

Standard Bank, Absa, First National Bank (FNB), and Nedbank are the major banks approving the most nationwide mortgages.

Once you’ve bought a home, registering a property will take approximately 23 days, comprising seven procedures, and costing around 8.0% of the property value. According to the World Bank Doing Business Report (2020), South Africa scored 59.5 out of 100 – comparatively better than the Sub-Saharan average (53.6) but not as well as the United Kingdom (75.7) – for the ease of registering a property. The indicators included:

  • Number of procedures
  • Processing time
  • Cost (percentage of property value)
  • Quality of the land administration index

Should you buy property in South Africa?

Residential properties in South Africa are cheaper than in many other countries. Still, overseas buyers usually need a downpayment of 50% of the property’s value to get a mortgage, which could be a significant barrier.

You’ll also need to factor in additional costs, such as transfer duty and legal fees, which are charged based on the property value you purchase.

Therefore, when first moving to South Africa, some expats choose to rent. By renting, you can take time to discover where to live and learn about the South African property market before buying a home.

When renting, you will need to pay:

  • Between four and six weeks’ rent as a deposit
  • A referencing fee
  • An admin charge for drawing up the lease

Tenancy agreements usually last at least 12 months.

Who can get a South African mortgage?

There are no legal restrictions on expats taking out a South African mortgage. As a foreign borrower, however, you must adhere to stricter rules than South African citizens.

A woman looks at her phone, with a cup in her hand, while standing in her bright kitchen
Photo: Anna Frank/ Getty Images

For instance, foreign residents and non-residents must first get a certificate from the South African Reserve Bank (SARB) proving that they are entitled to get a mortgage in South Africa. As mentioned above, the other key barrier is the significant deposit you’ll need.

Some newcomers may benefit from more lenient lending criteria if they have South African residence or a work visa. Some banks may allow you to borrow 75% of the property’s value in these instances. This varies, so consider taking advice from a mortgage broker on your options if applicable.

Banks in South Africa may also require you to set up a bank account to deduct your monthly mortgage repayments. When applying for a mortgage as an expat, you’ll usually require the following documents:

  • A certificate from the SARB
  • Proof of your South African residence status (if applicable)
  • Identification (such as a passport)
  • Proof of finances (recent bank statements)
  • Proof of income (recent pay cheques and employment contract)

What types of mortgages are available in South Africa?

There are two main types of mortgages in South Africa: fixed and variable rates.

Fixed-rate mortgages

With a fixed-rate mortgage, your rate will be predetermined at a specific amount for a set period (usually five years). This allows you to budget for the longer term without worrying about your repayments changing monthly.

When you reach the end date (i.e., fixed time frame), the lender will revert your mortgage to a variable rate, or you can negotiate a new fixed term with the bank. Fixed-rate mortgages offer peace of mind but can be more expensive than variable-rate deals.

Variable rate mortgages

Variable-rate mortgages are the most common type of home loan in South Africa. The cost of variable-rate loans changes depending on rates set by the SARB.

A couple sitting at their dining table, with laptop and paperwork, discussing the various mortgages in South Africa
Photo: mapodile/Getty Images

In simple terms, the SARB sets a rate it lends to banks (the repurchase rate or ‘repo’). This then determines the prime interest rate, which banks use to set consumer mortgage rates. The prime rate is always higher than the repo rate, enabling banks to profit from their loans.

Variable-rate mortgages have been prevalent in South Africa due to the prime rate falling to its lowest level in decades. However, rising inflation in 2022 resulted in a rate increase.

Mortgages for other purposes

South African banks also offer loans for projects other than purchasing a residential home, for example, holiday homes, buy-to-let properties, commercial buildings, and renovations.

  • Second mortgages for holiday homes: second mortgages or home equity loans (with different terms and interest rates) that allow homeowners to borrow against the equity in their primary residence to finance the purchase of a holiday home. The purchased property secures the loans.
  • Buy-to-let mortgages: for individuals or investors purchasing properties to rent them out (with different interest rates and requirements based on the needs of landlords)
  • Commercial mortgages: for businesses and property investors looking to purchase or refinance commercial properties, such as office buildings, retail spaces, and industrial properties
  • Home renovation mortgages: secured by the property value to finance home improvement projects, especially if these increase the home’s energy rating

As the types of mortgages, lending criteria, and rates differ between financial institutions, it is best to shop around for the best mortgage to suit your situation and budget.

Are there any green mortgage schemes in South Africa?

Although the South African government wants to improve sustainability practices across all sectors, it does not have a nationwide green mortgage scheme. Still, some municipalities may have local green initiatives or pilot programs to encourage eco-friendly home improvements.

Additionally, some residents are seeking greener energy resources, such as solar panels, due to the country’s energy crisis. However, many people cannot afford this option.

Technicians carefully connect and install solar panels on a residential rooftop on a house in South Africa
Photo: nattrass/Getty Images

Therefore, some banks offer an “energy home loan” to help homeowners afford energy-sufficient renovations. In practice, it uses the funds from an existing home loan or adds extra funds to top up a new mortgage for these purposes.

In 2013, the African Development Bank (AfDB) also established its Green Bond Programme to encourage sustainable financial development in African countries, including South Africa. To access Green Bonds, a property must have an Excellence in Design for Greater Efficiencies (EDGE) certification as created by the International Finance Corporation (IFC). As such, assessors will determine if a property meets resource-efficient building practices.

The residential property sector has welcomed this initiative as it includes advantages for property owners and the environment, such as:

  • Access to better financing terms and a reduction of interest rates on your home loan
  • More energy-efficient homes that are environmentally friendly with lower utility costs
  • Resale value for properties with an EDGE certification is higher

Banks offering green mortgages

Fortunately, the number of banks and lenders offering sustainable financing is growing and includes:

  • Absa
  • First Rand Bank (i.e., the retail division of FNB)
  • Investec
  • Nedbank
  • Standard Bank

As this list is not exhaustive, it is a good idea to discuss these green mortgage incentives with your prospective lender before applying for a home loan.

What are the mortgage rates in South Africa?

Mortgage rates in South Africa have been rising in line with increases in the prime lending rate. The prime rate fell to 7% in July 2020, but by July 2022 had increased to 9%. You can find the latest rate on the SARB’s website.

Exterior of the South African Reserve Bank Building in the city centre.
South Africa Reserve Bank (Photo: Jon Hicks/Getty Images)

Banks use the prime rate to determine the consumer mortgage. They will likely offer you a deal close to the prime rate if you have a low-risk profile. If you’re considered a higher risk, the lender will add a bigger margin to the prime rate.

Generally speaking, it’s unlikely that a bank will offer you a rate significantly below the prime rate, even if you have an excellent risk profile, as it will narrow the bank’s profit margin too much.

When banks offer variable-rate mortgages, they charge the prime rate plus or minus a specific margin. For example, if your mortgage is offered at the prime rate plus 2%, and the prime rate is 9%, you’ll pay 11%.

How much can you borrow for a South African mortgage?

As mentioned earlier, international borrowers in South Africa are limited to borrowing 50% of the property’s value when they take out a mortgage. This means you’ll need a significant deposit to buy a home.

Banks will also determine how much you can borrow based on your credit history and income. A good credit history will assure the lender that you’re a less risky proposition, increasing the chances of getting a good rate and being able to borrow more.

The amount you can borrow is also linked to how much you earn. Banks in South Africa will only allow your monthly repayments to be 30% of your income. If you’re borrowing with a partner (a joint application), at least one applicant must earn a minimum of R25,000 a year and have a clear credit record.

Mortgage terms in South Africa are most commonly 20 years, though it can be possible to take out a 25-year or even 30-year mortgage in some circumstances. Usually, you must settle your mortgage in full by the time you reach the age of 70.

Online mortgage calculator

An online mortgage calculator can estimate how much you can borrow when taking out a South African mortgage.

How do you apply for a mortgage in South Africa?

Before taking out a mortgage in South Africa, you should get approval in principle (AIP). This involves a bank evaluating your creditworthiness and indicating how much it will be willing to lend you subject to a full application.

Family of four, mum, dad, and two daughters barbequing and laughing outside their home
Photo: Klaus Vedfelt/Getty Images

It usually only takes a few days to obtain an AIP. Once you’ve got one and you have an offer accepted on a home, the bank will send a valuer to view the property and confirm it is willing to lend the pre-approved amount.

After this step, you’ll complete a formal application, and, all being well, the bank will grant the mortgage.


All major South African banks offer mortgages to expats, including:

  • Absa
  • Capitec
  • First National Bank (FNB)
  • Nedbank
  • Standard Bank

Mortgage brokers and financial institutions

Most prospective home buyers approach traditional banks in South Africa for home loans. However, there are also a few mortgage brokers or financial service providers across the country that can assist you, for example:

  • MortgageMax Devpro Nationwide Home Loans
  • Mortgage Market
  • Investec
  • SA Home Loans

Mortgage applications step-by-step

  1. Obtain a certificate from the SARB to confirm you’re eligible for a mortgage
  2. Compare deals directly with banks or by using a mortgage broker
  3. Choose a lender and request an AIP
  4. Once you’ve found a property and the seller accepted your offer, formally apply for the mortgage and confirm the exact deal and rate you’ll be taking
  5. Pay your mortgage deposit to secure the property and agree on a completion date when the lender will transfer the money to the seller

What are the South African mortgage costs you can expect to pay?

You’ll need to consider several additional fees when buying a house in South Africa, such as:

  • Transfer duty
  • Bond registration fee
  • Initiation fee

Most notable is transfer duty, which is charged when purchasing properties worth more than R1 million.

A couple in their kitchen looking at a tablet working out their mortgage payments in South Africa
Photo: Uwe Krejci/Getty Images

When it comes to mortgage fees, the first you’ll need to pay is the bond registration fee, which covers the cost of registering your mortgage. How much you’ll pay is based on a sliding scale depending on the property’s value.

Additionally, the bank will usually charge an initiation fee for setting up the mortgage. This is a flat, one-off fee you can pay up-front or add to your mortgage account.

You can use an online calculator to estimate your transfer costs. For example, Ooba calculates that on an R1 million mortgage, you’d pay a bond registration fee of R25,000 (2.5%) and a bank initiation fee of R6,000 (0.6%).

Does South Africa tax mortgages, and can you claim tax relief?

In South Africa, you pay property taxes, without any deductions available for owner-occupier mortgages. Mortgage interest is only tax deductible for second homes and properties bought as buy-to-let investments.

If you purchase a home for buy-to-let purposes, you can offset mortgage interest and a range of other costs (e.g., letting agent fees, insurance premiums, and the cost of repairs) when calculating how much tax you’ll need to pay on your rental income.

Should you purchase home insurance in South Africa?

When taking out a mortgage in South Africa, you’ll usually need building insurance. This offers protection if the property structure is seriously damaged, for example, if there’s a fire or flood.

It’s not compulsory to purchase contents insurance to protect your belongings against such eventualities and burglaries, but it will give you additional peace of mind.

South African lenders sometimes require mortgage protection cover should you become seriously ill or die and cannot repay your home loan. For most borrowers, coverage is optional, but if you’re purchasing an affordable home or borrowing a large sum, it may be compulsory.

If you take out a policy, you’ll need to ensure its maximum protection level is high enough to cover your mortgage repayment in full.

How do you repay your South African mortgage?

Your mortgage payments will come out on the same agreed date each month. South African banks will usually allow you to make overpayments to clear your debt quicker, but the exact rules vary from lender to lender.

If you’re struggling to make your mortgage payments, contact your lender immediately, as it may be able to offer you support.

Can you refinance a mortgage in South Africa?

Refinancing your home can be a sensible move if you’ve owned it for several years, as it enables you to use the equity you’ve built up to reduce your monthly payments.

A mum carrying baby on her back paints the wall of a room, home improvements
Photo: Petri Oeschger/Getty Images

Alternatively, some homeowners refinance to release equity from their property, for example, to fund home improvements. You may need to pay new bond registration and bank initiation fees when refinancing your deal.

Useful resources

  • SARB – latest prime rate for mortgages
  • Ooba – transfer cost calculator
  • FNB – latest property market figures