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There is a mistaken believe that it is almost impossible for someone that is an entrepreneurs or self-employed to obtain a homeloan due to the banks’ very strict lending criteria.
According to Ooba (Homeloan originator), securing a homeloan if you are self-employed is not impossible.
It is important to note however that the Homeloan application process does require a little bit more effort than that of someone who is not self-employed.
Banks generally consider self-employed individuals as high risk. The lack of a guaranteed income from a single source can make banks anxious about financing a home for you.
However if one does their homework as with any other Homeloan application and gets the expert assistance of a bond originator to get you prequalified for a home loan, you will be better prepared to enter the property market.
This will take the hassle and aggravation out of the process and will also possibly help you to avoid disappointment.
So how can you increase the chances of your home loan being approved? The first and most important step is to ensure you have all the right documents in place:
If you are self-employed, you should have the following to submit when applying for a home loan:
1. Comparative financials covering a trading or working period from the last two years.
2. Letter from your auditor confirming personal income.
3. If your financials are more than six months old, you will need up-to-date signed management accounts.
4. Cash flow forecast for the next 12 months.
5. Personal statement of assets and liabilities.
6. Personal and business bank statements - six to 12 months, depending on the banks’ requirements.
7. Latest IT34, which is confirmation from SARS that your tax affairs are in order.
8. Company, CC or Trust statutory documents.
9. ID documents for all the directors, members or trustees.
The list may seem frightening but this is why it is important to use an expert to guide you through the process. It is also crucial to have all your tax affairs and finances in order and up to date. Plus one should have their personal and business expenses separate.
Maintaining a good credit record and ensuring you have all the required paperwork will increase the chances of a home loan application being approved faster.
A self-employed homeloan application process will generally take longer for approval than that of someone who is not self-employed