How To Get a Home Loan as a Self-Employed South African

Self-employed? Looking for a home loan?

Navigating the process can be challenging for anyone, but for self-employed professionals in South Africa, it often comes with additional complexities. Without a fixed monthly salary, proving you have a stable income requires more documentation and preparation. However, with the right approach and understanding of the home loan process, securing a bond can be a reality.

Understanding the mortgage process as a self-employed client

The approval of your home loan is based on income stability and creditworthiness. For self-employed applicants, this means providing comprehensive financial records to demonstrate consistent earnings. Understanding the mortgage process is crucial to anticipate the requirements and streamline your home loan application.

Figure out what you can afford

Before applying for a home loan, it’s essential to understand how much you can realistically afford to borrow. SA Home Loans offers an online affordability calculator that can give you a good indication of your potential home loan amount. Keep in mind that this estimate is still subject to final approval criteria and the specific details of your application.

As a general guideline, your monthly bond repayment shouldn’t exceed 25% of your average monthly income. It’s also important to consider additional upfront costs such as transfer fees, bond registration costs and insurance, as these can add up quickly. While some home loans may not require a deposit, contributing one can strengthen your application and increase your chances of approval.

Another key step is to ensure your business and personal finances are clearly separated. Mixing the two can lead to complications or delays in processing your application. If you’re applying jointly with a partner or family member, they’ll also need to submit relevant documentation to support the application.

Here’s what we need from you

To strengthen your home loan application, ensure you have the following:

• Copy of ID (for all applicants)

• Copy of registration documents or trust deed

• Letter of drawings from an accountant on their letterhead, dated and signed

• Latest 6 consecutive months personal and business bank statements reflecting all income earned for a minimum of 6 consecutive months (for all applicants)

• Latest 2 years annual financial statements. If these are older than 6 months, management accounts not older than 2 months are also required. Both need to be signed by the applicant and accountant.

Having these documents ready can expedite the home loan process and improve your chances of approval.

Give your application the best chance of approval

• Maintain a healthy credit score: Regularly check your credit report for inaccuracies and address any issues promptly.

• Reduce existing debts: Lowering your debt-to-income ratio can make you a more attractive borrower.

• Save for a deposit: A substantial deposit can reduce the loan amount needed and demonstrate financial responsibility.

• Get pre-approved: Obtaining pre-approval can give you a clear understanding of what you can afford and show sellers you’re a serious buyer.

We’re your partner in the home loan process

At SA Home Loans, we specialise in assisting self-employed individuals through the home loan journey. Our team understands the unique challenges you face and they are committed to providing personalised support every step of the way. Yes, we will walk the journey with you.

Contact our specialists today and experience our amazing service. Call 0860 2 4 6 8 10 or request a call me back.