How to apply for a home loan when you are self-employed

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The additional criteria for self-employed buyers are understandably daunting, however, with the guidance of knowledgeable and experienced property finance specialists and property practitioners, it’s possible to seamlessly navigate the potential administrative minefield. that acquiring your dream home entails.

As with any home loan application, the best is to be prepared with a deposit, and for those that are self-employed the bigger the better.

Major banks vary slightly in their evaluation criteria when a bond application is made by a person who is self-employed, but the common requirement is proving that there is a steady income and that about 30% of the average net income can be used to service a home loan.

If the applicant is divorced and maintenance is part of the regular income to be included in the earnings to be able to qualify for a bond, a copy of the divorce decree stating this should be included.

If there are any lease agreements where income will be included in the income statement of the applicant, the rental amount must be current and not predicted future amounts. Some of the banks ask for copies of lease agreements in place or rental schedules.


Start by ensuring your paperwork is in order before you even consider applying for a bond, as it will save you a lot of time and hassle once the process is set in motion.

Requirements can vary according to the application and the loan amount requested, but self-employed buyers will generally need to provide the following:

  • Comparative financials covering a trading or working period of the latest two years;
  • A letter from their auditor confirming personal income;
  • If their financials are more than six months old, the bank will need up-to-date signed management accounts;
  • A cash-flow forecast for the ensuing 12 months;

• A personal statement of assets and liabilities;

  • Personal and business bank statements;
  • Their latest IT34, which is confirmation from SARS that their tax affairs are in order;
  • Their company, closed-corporation (CC) or Trust statutory documents;
  • The ID documents of all their business’s directors, members or trustees;
  • Depending on the complexity of their application, it may also be useful to provide a short CV.

Tax affairs

Make sure all your tax affairs are in order. Outstanding tax returns, of whatever nature, will have a detrimental impact on the outcome of your home loan application.

Consider recruiting the services of a tax consultant or professional accountant if you need to as they can advise on how to best go out ensuring your tax is in order and creditworthiness is in good standing.

Credit record

A clear credit record is the foundation of sound personal financial management, and one of the first things that will be scrutinised when you apply for a home loan.

Bad credit, which typically results from defaulting on payments and loans, filing bankruptcy and unpaid judgements, decreases your chances of having your credit application approved.

All South Africans are granted one free credit check a year so it is advisable to that before putting the application process into motion. There is no need to panic if your credit record is unfavourable as it is possible to restore it to good health. A certified debt counselor can assist with this.

Potential Pitfalls

Potential pitfalls for self-employed applicants are where their financial statements are outdated and they do not have up-to-date management accounts; where they have not kept their personal expenses separate from their business expenses; where their financial and tax affairs are not in order.

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