Banking – South Africa
Understanding the banking system in the country where you are considering your property purchase assists in easing the process. Below you will find general information regarding the South African banking system.
Unlike most countries in Africa which largely run on a cash economy, banking services in South Africa are as sophisticated as those in Europe and the USA. As well as ATMs in cities and towns, the country has also introduced a system of cell-phone banking which it hopes will help the poorest in the most remote areas to take advantage of banking facilities.
The controlling bank is the South African Reserve Bank, which acts independently of the government in setting the country’s interest rates. The Reserve Bank also registers money brought into the country by foreign (non-resident) property purchasers; this registration entitles them to take out the money as well as any profits they make, when they decide to sell. Exchange controls were originally brought into the country during World War II and were tightened during the reign of apartheid to stop citizens from taking their money out of the country. Controls have now eased and the plan is to eventually do away with the regulations altogether.
Opening a bank account in South Africa while in South Africa, is quite straightforward whether you are a resident or non-resident. If you are opening a non-resident account the only limitation is that you may not deposit Rand. However property owners letting out their properties are not subjected to this restriction. In order to open a bank account you must be over 18 years old, have identification in the form of a passport and proof of address or ownership of a property. It is best to phone the bank of your choice to find out what documentation they require before going to open the account as requirements may vary.
The big four banks in South Africa are:
- Absa Bank
- First National Bank
- Standard Bank
Most major credit cards are accepted in South Africa and ATMs are found in almost all towns that are of a medium size. However don’t rely on ATM machines for money especially when travelling around the country as many in smaller towns often run out of money.
South African banks offer both fixed interest and standard repayment mortgages to non-residents to a limit of 50% of the value of the property. Borrowers must be between the ages of 18 - 70 and loan terms are up to 25 years.
South African banks run their mortgage market, or bond market as it is known locally, along similar lines to the British market and run along a standard “affordability” basis.
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