A reader has been having problems accessing credit in South Africa because as a non SA citizen he does not have a green ID book. Despite working as a qualified architect and having a work permit he finds he is discriminated against when it comes to credit, even for hire purchase.
Another reader was declined a mortgage bond for the same reasons despite living and working in SA for 10 years. What exactly is the position for non-citizens?
FNB’s response: Build a credit record
FNB will open accounts for immigrants holding foreign passports providing the visa includes a work permit. FNB will also open certain accounts for holders of refugee permits from Home Affairs. When considering an application for credit we look at the customer’s credit record, income and living expenses.
As new arrivals in the country do not have credit records we would struggle to make a credit decision. The same is true for a South African or a long term resident who has never made use of credit or service agreements (such as a cell phone contract).
The best way to overcome this hurdle is to open a small credit account at a retailer and build a credit profile. It will take 6 to 12 months before the credit bureaus consider the rating to be stable.
People should not underestimate the value of their credit records: it can take several years to develop a good record and it should always be protected.
Absa’s response: Home Loans for foreigners
Absa Home Loans understands the potential for the local property market, which has emerged through the positioning of South Africa as the premier host nation for a variety of international events. This in itself encourages foreign nationals to invest in South Africa by purchasing residential property locally.
In response to this market opportunity, Absa Home Loans launched its International Mortgages proposition in January 2008, with the aim of providing an accessible and knowledgeable service to assist Non Resident and Temporary Residents purchase property in South Africa.
The extension of credit to Non Residents and Temporary Residents is governed by the South African Reserve Bank’s Exchange Control Policy, as well as the credit lending policy of the financial institution extending the credit. It is therefore important for the applicant to understand their residency status, as this will determine the way in which the loan is extended and evaluated.
There are 5 basic classifications:
- SA Resident
- Non Resident
- Temporary Resident
- Refugee
- Immigrant.