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Self-Employed? How to Fast-Track Your Bond Application

Story Highlights
  • #1 - Get your bond application paperwork in order
  • #2 - Get your tax affairs in order
  • #3 - Make sure you have an excellent credit record
  • #4 – Try to save for a big enough deposit
  • #5 – Work with professionals

Self-employed workers often struggle to get approved for a home loan. Fortunately, there are many ways that can help you fast-track your bond application.

Buying property involves a specific process and the potential homeowner needs to meet certain requirements. As a business owner, these requirements might be a little bit different. Even though the interest rate is at its lowest in 50 years, banks are still strict during the application process.

Some entrepreneurs believe that they will never qualify for a loan due to the nature of their work. This is simply not true. There are several ways that you can become approved in no time. 

#1 – Get your bond application paperwork in order

Applying for a home loan is a stressful process but it doesn’t have to be.

The most important thing you can do is to ensure that your bond application paperwork is in order.

Requirements can differ, depending on the institution, but self-employed buyers usually need to provide the following:

  • Updated comparative financials for the past two years. 
  • A letter from an auditor confirming income. 
  • A cash-flow forecast covering the next year. 
  • Bank statements and statements of liabilities and assets. 
  • An updated IT34 from SARS.
  • IDs from all business directors, members, and trustees. 

Any buyer should ensure that all financials are in good order and that they have healthy credit scores before applying. 

#2 – Get your tax affairs in order before applying for a bond application

If you have any outstanding tax returns of whatever nature, it needs to be sorted out immediately.

All your tax affairs should be in order if you want a favourable outcome. Enlist the help of an accountant or a tax consultant who will then guide you through the process.

Keep your personal and professional taxes separate. Your personal expenses claimed from the business could inflate your income which could harm the outcome of the application. 

#3 – Make sure you have an excellent credit record when approaching banks for a bond application

A bad credit record is the worst way to start the bond application process.

Bad credit usually occurs when you have defaulted on payments, filed for bankruptcy, and have unpaid judgments against you.

All South Africans have access to one free credit check per year so it is easy to have a look at it before you apply.

If your credit score is not what it should be, there is no need to be concerned. It is usually quite easy to restore it. A debt counselor should be able to assist you. 

#4 – Try to save for a big enough deposit

Whether you are employed or self-employed, a deposit is the best way to secure your loan and to gain the trust of the bank.

A deposit shows that you have savings which in turn shows that you are financially responsible. Banks see this as a sign of trustworthiness and that you will be able to meet your monthly mortgage payments.

Banks usually ask for a deposit of 10-20% of the asking price but you can choose to put down a bit more. The bigger your deposit, the better for you. 

#5 – Work with professionals

You must work with people who have enough expertise in the bond application process.

Using the services of a bond originator will increase your chances of having your loan approved.

They will assist you in the loan process and they will forward your application to various financial institutions. This means that you get to choose the best deal. 

Being self-employed does not have to be an obstacle when it comes to investing in property. Just make sure that you follow these easy steps and you should have an approved bond in no time. 

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