APPLYING FOR A LOAN WHEN YOU’RE SELF EMPLOYED

Being Self Employed is an increasing trend in South Africa and with the amazing talent that South Africans are showing every day, running your own business is probably one of the most rewarding yet challenging things you can do in your life.

At No cost to You, we can assist with the following professional services:

  • New Loan
  • Further Loans on your Existing Property
  • Building Loan
  • Insurance Referral
  • Commercial Finance Referral
GET PER-QUALIFIED

Get Pre-Qualified

You will need to Complete…

  • The Pre-Qualification Form (please include all incomes & expenses, so that we can be as accurate as possible)

And Send it back to us with these…

  • Clear ID/Passport Copy
  • Copy of Lease Agreement (only if you get Rental Income)

Please let us know which Banks you hold accounts with.

Once Pre-Qualified

You will need to Complete…

  • The Application Form
  • The Signed Last Page of the Application Form
  • Signed & Completed Dea Consent Form
  • Signed & Completed Credit Check Consent Form
  • Existing Nedbank relationship clients, will need to complete the Nedbank Declaration Form, Nedbank Coversheet & the Nedbank Commitment Letter.

And Send it back to us with these…

  • Clear ID/Passport Copy
  • Copy of Marriage Certificate (if married).
  • Proof of Current Address (no older than 3 months, and non PO Box).
  • Copy of Lease Agreement (if applicable)
  • Copy of your Degree (if rapplicable)
  • Most recent 2 -3 years Financial Statements from your accountant
  • Letter of Income from your accountant confirming your monthly drawings
  • Signed and Dated Personal Assets & Liabilities.
  • Non Internet Up-to-Date Bank Statements for past 6 months for Business as well as Personal Bank Accounts.
  • Company Registration Documentation
  • IT 34

To Ensure that your business is registered on the Experian Ki System contact 011 799 3400 or 086 110 5665

Ensure that your Cipro Fees are up to date. Your accountant can assist you herein.

Get Pre-Qualified

You will need to Complete…

  • The Pre-Qualification Form (please include all incomes & expenses, so that we can be as accurate as possible)

And Send it back to us with these…

  • Clear ID/Passport Copy
  • Copy of Lease Agreement (only if you get Rental Income)

Please let us know which Banks you hold accounts with.

Once Pre-Qualified

You will need to Complete…

  • The Application Form
  • The Signed Last Page of the Application Form
  • Signed & Completed Dea Consent Form
  • Signed & Completed Credit Check Consent Form
  • Existing Nedbank relationship clients, will need to complete the Nedbank Declaration Form, Nedbank Coversheet & the Nedbank Commitment Letter.

And Send it back to us with these…

  • Clear ID/Passport Copy
  • Copy of Marriage Certificate (if married).
  • Proof of Current Address (no older than 3 months, and non PO Box).
  • Copy of Lease Agreement (if applicable)
  • Copy of your Degree (if rapplicable)
  • Most recent 2 -3 years Financial Statements from your accountant
  • Letter of Income from your accountant confirming your monthly drawings
  • Signed and Dated Personal Assets & Liabilities.
  • Non Internet Up-to-Date Bank Statements for past 6 months for Business as well as Personal Bank Accounts.
  • Company Registration Documentation
  • IT 34

To Ensure that your business is registered on the Experian Ki System contact 011 799 3400 or 086 110 5665

Ensure that your Cipro Fees are up to date.

Your accountant can assist you herein.

HAVE QUESTIONS ?

WE MIGHT HAVE THE ANSWERS HERE.

SELF EMPLOYMENT GUIDELINES

If you are self-employed and serious about buying property, we would strongly recommend that you take note of the guidelines below and apply it to your individual situation, in preparation for your home loan application.

The applicant should ideally have 2 separate bank accounts. One business account and at least one personal account, in order for the banks to be able to differentiate between business income & personal income. Cash income is not considered by the bank unless banked. Banks require 6 months non internet up to date bank statements for both the business and personal account.

Sole Proprietor applications are assessed differently, however it is still important to show your personal income/benefit from the business, after paying all your expenses, separate from the rest of the staff. The bank will not assume that all the profit is your income.

It is essential that your accountant can show the salary earned by the applicant in the financials. The banks do not work with the companies turn over, when assessing an application in the clients personal name. We need to show what the individual’s personal drawings, from the business has been, as “members drawings” or “Directors Remuneration.”

It is advisable to pay yourself a salary towards your personal account on a set date every month, in order to show consistency of your drawings from the business towards your personal account. If at all possible it would be advisable to pay the same salary over on a monthly basis.

It is important that your IT34 shows the same salary to the “salary drawn” to your personal account. You have to ensure that you pay the correct amount of personal tax over to SARS. The banks and SARS works very closely together and the bank will not work on income declared by the accountant, via a letter, if it does not correlate with your most recent Personal Tax Return.

If your business pays for personal expenses such as cellphone, vehicle finance etc (directly from the business account) and the account is still in your personal name, it will still be seen as your personal expense, no matter which account the debit order goes off from. If it is a business expense and you wish to claim it as a business expense from SARS, you need to change the account with the supplier to the business name, else it will continue to be seen as your personal expense on your bond application. Should your personal expenses be paid directly by the business, your accountant will have to give a detailed explanation on exactly how your income is derived.

It is Important that the Financial Statements, compare to the letter of earnings from the accountant, as well as to the bank statements.

 

If you are self-employed and serious about buying property, we would strongly recommend that you take note of the guidelines below and apply it to your individual situation, in preparation for your home loan application.

 

 

Separate bank accounts

The applicant should ideally have 2 separate bank accounts. One business account and at least one personal account, in order for the banks to be able to differentiate between business income & personal income. Cash income is not considered by the bank unless banked. Banks require 6 months non internet up to date bank statements for both the business and personal account.

Applications are assessed differently

Sole Proprietor applications are assessed differently, however it is still important to show your personal income/benefit from the business, after paying all your expenses, separate from the rest of the staff. The bank will not assume that all the profit is your income.

Show the salary earned

It is essential that your accountant can show the salary earned by the applicant in the financials. The banks do not work with the companies turn over, when assessing an application in the clients personal name. We need to show what the individual’s personal drawings, from the business has been, as “members drawings” or “Directors Remuneration.”

Pay monthly salary on same day

 It is advisable to pay yourself a salary towards your personal account on a set date every month, in order to show consistency of your drawings from the business towards your personal account. If at all possible it would be advisable to pay the same salary over on a monthly basis.

IT34 shows same salary to salary drawn

 It is important that your IT34 shows the same salary to the “salary drawn” to your personal account. You have to ensure that you pay the correct amount of personal tax over to SARS. The banks and SARS works very closely together and the bank will not work on income declared by the accountant, via a letter, if it does not correlate with your most recent Personal Tax Return.

Business pays for personal expenses

If your business pays for personal expenses such as cellphone, vehicle finance etc (directly from the business account) and the account is still in your personal name, it will still be seen as your personal expense, no matter which account the debit order goes off from. If it is a business expense and you wish to claim it as a business expense from SARS, you need to change the account with the supplier to the business name, else it will continue to be seen as your personal expense on your bond application. Should your personal expenses be paid directly by the business, your accountant will have to give a detailed explanation on exactly how your income is derived.

Financial Statements

It is Important that the Financial Statements, compare to the letter of earnings from the accountant, as well as to the bank statements.

OUR DEDICATION

SELF-EMPLOYED – IS IT HARDER TO GET ONTO THE PROPERTY LADDER?

Whilst self-employment means freedom and flexibility for many people, research has shown that it may leave many unable to fly the nest.

Although it’s widely known that getting onto the property ladder will be tricky for most first-time buyers, research from Aldermore suggests that for self-employed people, it might be even more of a challenge.

With responses from over 1,500 potential and actual first-time buyers, the results indicated that 62% of self-employed people were not sure how they’d be able to afford their first home. 32% stated that raising a deposit was the biggest obstacle. 14% said that simply securing a mortgage was going to be a struggle, compared to 9% of those employed full-time.

NEED HELP PREPARING FOR A HOME LOAN?

What benefits would a first-time buyer have, when applying for a home loan?

There is a myth that first time buyers will secure a 100% bond easier than a client buying for a second or third time. First time buyers used to have special benefits such as 108% bonds, but the current situation is that the banks decision is strictly guided by the internal scoring models within the various banks and the clients external credit bureau track record. The banks system will generate a risk rating for every application on submission and if the clients risk rating is not sufficient, the system will block the application and result in the application being declined upfront, without any supporting documentation, motivations or explanations pulling through to credit.

Email

info@paynelessbonds.co.za

Phone

+(27) 87 151 4712

+(27) 11 662 2396

+(27) 83 707 1684

Address

1182 KATLAGTER STREET
FEATHERBROOKE ESTATE
1746 GAUTENG, SOUTH AFRICA

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