Getting finance for a home loan abroad (USA) ??

Werner Hurter

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Oct 2, 2015
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I'm just wondering if this would even be possible...

Absa Home Loan Calculator
Price of house: R 1 000 000
Deposit: R 100 000
Interest rate: 10 %
Period: 10 Years
Monthly bond repayment: R11 893

Total Repayment: R1 427 227
Total interest paid: R 427 227

Bankrate Mortgage Calculator @ 1$/ R14.87
Price of house: ($67 250) R 1 000 000
Deposit: ($6725) R 100 000
Interest rate: 4.9 %
Period: 10 Years
Monthly bond repayment: ($639) R9502

Total Repayment: ($76 680.86) R1 140 244
Total interest paid: ($16 155.86) R 240 238
 

Milano

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Feb 7, 2004
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Just remember interest rates will not be as good as those offered to US citizens when buying your property in the US.
 

cguy

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Jan 2, 2013
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They won’t even finance a home for you IN the USA without a US credit record. Never mind all the assessment requirements.

Something that you should also be aware of is that as the Rand devalues, your Rand based loan will become cheaper and your US based loan will become more expensive.
 

Ancalagon

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Think about it - if an American company were to lend you money for a home in South Africa, they would have to charge you higher interest to reflect the greater amount of risk they were taking. So, even if an American bank were willing to lend you the money, they would not be any cheaper. Probably more expensive.
 

Milano

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Think about it - if an American company were to lend you money for a home in South Africa, they would have to charge you higher interest to reflect the greater amount of risk they were taking. So, even if an American bank were willing to lend you the money, they would not be any cheaper. Probably more expensive.
Quite sure he means for a property in the US. Well at least I hope he does.
 

Ancalagon

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Quite sure he means for a property in the US. Well at least I hope he does.
As far as I understand, he is saying that the rate of interest is much lower in the USA, so why not borrow money there for a house here?

OP, maybe clarify?
 

Werner Hurter

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Oct 2, 2015
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As far as I understand, he is saying that the rate of interest is much lower in the USA, so why not borrow money there for a house here?

OP, maybe clarify?
Exactly what I'm asking. The saving is obviously on the lower interest rate.

Let's say you where start a USA based business with a friend that's based in the USA and he or she is also a USA citizen. Would you then be able to acquire funding in the USA for your "office" in South Africa via this business venture ?
 

Ancalagon

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Exactly what I'm asking. The saving is obviously on the lower interest rate.

Let's say you where start a USA based business with a friend that's based in the USA and he or she is also a USA citizen. Would you then be able to acquire funding in the USA for your "office" in South Africa via this business venture ?
Think about it - how will the USA bank evaluate the risk?

When you borrow money in the USA for a property in the USA, the bank has legal grounds to repossess the property if you don't know. The loan is secured. If you were to borrow money in the USA to buy property in SA, what happens if you default on your payments? How will the bank get its money back? It is not even a legal entity in South Africa - what can it do about it? Absolutely nothing.
 

Snyper564

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just to make matters interesting when you make that repayment you will also pay interest withholding tax which would make this way to costly...
 

Milano

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I would imagine you would need collateral in the US and an access style loan and then they may not care how or where you spend it, you could probably then spend it on hookers & coke and blow the rest for all they care.
 

Lord Farquart

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Here in Holland you can buy a property without a Dutch credit record. Interest rates are the same as for citizens. Even the deposit requirements are the same. Simple economics, value of property must be more than bond amount, hence the deposit requirement. With a healty economy and property market, the risks are zero for the banks.
 

Milano

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Here in Holland you can buy a property without a Dutch credit record. Interest rates are the same as for citizens. Even the deposit requirements are the same. Simple economics, value of property must be more than bond amount, hence the deposit requirement. With a healty economy and property market, the risks are zero for the banks.
What are the interest rates?
 

krycor

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This what the Turkish populous did with European & US banks.. fine and dandy till your currency tanks.

Unless your income is in or hinged(u get the zar equiv to a fix usd salary) to loan currency or your cash surplus is same currency (and then why when u taking huge risk) u will almost always make a loss where the loan currency is appreciating vs host/home country.
 

quovadis

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They won’t even finance a home for you IN the USA without a US credit record. Never mind all the assessment requirements.
This^ and you'd need to be US citizen or at minimum a permanent resident still maintaining a presence requiring a home in the US.
 

Jehosefat

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Completely aside from location of the house and your risk to the bank, the cost of funds is significantly different. The bank can borrow the $ that it lends to it's US customers at pretty close to the federal funds rate or USD LIBOR which is around 2.5 - 3% as well as some much cheaper retail funding at probably 0.5%. they then add their markup and lend the cash to you at the quoted 4.9%. For that same bank to borrow ZAR they would be able to get it at JIBAR or the REPO rate (at the best case) both of which are around 6.5%. They would then need to add their markups, additional margin for the cross currency risk etc. and then you would be lucky to end up at the quoted 10%.
 
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