Bond Application for Self Employed Individuals
Applying for a home loan is quite a challenging experience for self-employed individuals, mainly due to the fact that they do not have a consistent source of income. Financial providers and banks unfortunately classify these applicants as “high risk” and therefore use a particular assessment criteria specific to self-employed individuals for their mortgage bond qualifying assessment.
The purpose of this assessment is to evaluate whether the potential homeowner will be able to meet the monthly payment obligation of the mortgage, despite fluctuation of income, should the loan be granted.
There are three crucial factors that are evaluated during the assessment which are:
- Credit history – The bank conducts an ITC record check through the credit bureau, to evaluate your payment history. Timeous payments of your accounts are essential in building a great credit history.
- Affordability – The bank also goes through your bank statements to determine the mortgage amount you qualify for, by assessing your monthly income against your expenses (bills, rent, transport etc.).
- Value of the property – The bank does a property evaluation to ensure they find value in the property. The property value serves as security for the bank should the bond be approved.
- A Letter from your auditor confirming income.
- A signed and audited comparative financial analysis report for the previous two (2) years.
- Up to date, signed management accounts, not older than three (3) months.
- Cash flow projected forecast for a 12 month period.
- Company, CC or Trust statutory/registration documents.
- Last three years IT34 from SARS, ensuring that your taxes are up to date and in order.
- Signed personal statement of assets and liabilities, signed and dated.
- Signed personal income and expenses, signed and dated.
- ID documents of all the directors, members and trustees.
- Six (6) months non-internet business and personal bank statements.
- Signed assets and liabilities plus balance sheet of Company, CC or Trust.
Your accountant should easily be able to assist with most of these documents.
Tips to Improve your Mortgage Chances:
- Make timely payments on your accounts.
- Lower your existing debts.
- Check your credit record for any errors.
- Offer a high deposit on the property.
- Refrain from making any big purchases prior to your bond application i.e. buying a vehicle.
- Use a professional mortgage originator.
For more advice and access to professional originators that will work in your best interest, contact Intro Real Estate, it’s the right choice.