As an international buyer, you qualify for a mortgage in South Africa when buying your dream home. However, the law explicitly determines how much you are legally allowed to borrow from local financial institutions, as well as the regulatory conditions which should be met to obtain such a loan.

While mortgages are permitted, the Exchange Control Regulations and the Currency and Exchanges Manual for Authorised Dealers govern the lending rules – including how much a foreign buyer may borrow, when exceptions apply, and what security is required. 

Property ownership is open to foreign nationals, but the borrowing framework is more technical and that is where many buyers stumble. Without the right expert guidance, it is easy to receive conflicting or incorrect information about what foreign purchasers may or may not do. Understanding the rules upfront can save time, prevent frustration, and ensure that your South African property plans are structured correctly from the start.

The Legal Framework Behind Foreign Buyer Lending: It Starts with Exchange Control Regulations 

Foreign buyers who explore mortgage options in South Africa, quickly discover that the process starts with South African Exchange Control Law, rather than bank policy. It all begins with Exchange Control Regulation 3(1)(f), which provides that no person may grant financial assistance to a non-resident without the National Treasury’s permission.

This authority is exercised by the South African Reserve Bank’s Financial Surveillance Department (FinSurv) and implemented by Authorised Dealers, which are typically commercial banks.

The principle behind the rule is simple: South Africa does not allow foreigners to leverage the local financial system unless they also invest their own capital into the country. For this reason, any lending to an international buyer must fit within a specific exemption under the Exchange Control Regulations.

Where the Exemption Comes From: The Currency and Exchanges Manual

The Manual contains the key exemption clauses that allow banks to grant mortgages to foreigners. The 50% rule derives from these provisions. 

Under section I.1 of the Manual, Authorised Dealers may lend to foreign buyers for property purchases, but the 1:1 ratio applies. This means that for every R1 in cash or assets introduced into South Africa by the international investor, the bank may lend R1. In effect, the foreigner may not borrow more than the Rand value of funds they have physically introduced into the country.

It works like this: A foreigner buying property in South Africa may only borrow up to a maximum of 100% of the sum introduced into South Africa to fund the purchase of a property, i.e., 50% of the purchase price. So, where the purchase price is R10 million, and the overseas buyer introduces R5 million into South Africa, he is then permitted to borrow a maximum of R5 million, effectively limiting most to 50% financing, subject to approval. This applies to non-residents who do not live or work in South Africa.

When Banks May Lend More

The Manual also sets out the circumstances under which banks may exceed the 1:1 ratio. According to section I.1(E)(ii), non-residents who live and work in South Africa may borrow subject to normal lending criteria. In these cases, the 50 percent rule does not apply because the borrower is treated similar to a resident for lending purposes.

This exemption often causes confusion. A foreign national with a work visa or right to reside long term in South Africa [which does not always come with the right to work], earning South African income and holding a South African bank account, may qualify for a mortgage of more than 50 percent of the purchase price. The bank will still apply its risk and affordability criteria, but exchange control does not cap the loan at the 50 percent threshold.

The obtaining of the right to work in South Africa is a very achievable process if approached correctly, yet many foreign nationals often fail to optimise this opportunity. It should be noted that the right to reside in South Africa long term does not mean you necessarily have the right to work in the country. The right to work in South Africa includes being employed or having your own business. Whether you work for a foreign employer or only have a business which serves non-South Africans are irrelevant. The physical performing of an activity in South Africa is what triggers both South African work permit requirements as well as South African tax.

Security Requirements for Foreign Buyers Remain Strict

It is important to note any facility granted to a foreigner must be secured by an unencumbered Rand deposit or Rand-based asset of equal or greater value, and the facility may not cause the borrower to exceed 100 percent of the Rand value introduced into South Africa. This ensures that the South African banking system does not absorb disproportionate risk relative to the buyer’s offshore contribution.

The Manual provisions bind all Authorised Dealers, and local banks do not have the discretion to lend outside these limits unless the buyer falls under a recognised exemption.

If you are purchasing property in South Africa and require clarity on borrowing limits or exchange control compliance, it is advisable to engage with experts who can guide you through the process and ensure your transaction proceeds smoothly and lawfully.

Written by Michelle Phillips, Senior Attorney: Exchange Control & SARS Engagement at Tax Consulting SA