Obtaining a bond can seem like a lengthy and complicated process, particularly for those who are self-employed. However, while there may be additional information required to successfully be granted a home loan, being self-employed should not be seen as an obstacle to accessing finance.
The reality is that financial institutions need to ensure that a loan will be honoured and repaid, and without a regular salary slip, it can be a little trickier to prove one’s affordability, and therefore one’s likelihood of repaying a home loan in the required timeframe.
Most importantly, it is essential that all finances and taxes are in order and up to date. With this in place, the following documents should be compiled as part of a bond application:
- Comparative financial information for the last 24 months
- A signed letter from an auditor confirming your personal income
- A cashflow forecast for the next 12 months
- A statement of assets and liabilities
- Individual and business bank statements
- Confirmation from SARS that your tax is in order (IT34)
- Relevant documents relating to the company, trust or CC
- ID documents for all directors, trustees or members
- Any additional supporting documents
Note: the above list is not exhaustive and the exact requirements may vary from bank to bank.
The list of required documentation can seem daunting at first, but with the assistance of a professional tax practitioner or auditor, it becomes simpler.
In addition to these documents, it is important, as it is with all bond applicants, to ensure that your credit rating is in good shape. Make sure that your credit history is in good standing and that there are no judgments against your name. It is also important to manage your monthly finances carefully to be able to show the appropriate amount of regular and disposable income.
Following these guidelines and ensuring all documentation is in order will make the process of applying for a home loan, and therefore buying a home, easier, smoother and ultimately more successful.
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