Home Loan Tips
Self employed persons should not except SA Home Loans providers to read their financial statements any differently than the SA Revenue Service (SARS) do.
Most mortgage lenders are aware though, that it is prudent for the self-employed to use the tax laws to their advantage and claim all legitimate expenses to reduce their tax liability.
Says Rudi Botha, CEO of SA mortgage originator PA BetterBond: “If you own a business that makes R500 000 a year, and your financial statements show that your business expenses are R400 000 a year, leaving you with an income of R100 000, you can’t turn around and tell a bank that you actually earn R200 000 and should thus qualify for a bigger home loan.”
Although Self-employed persons will need to submit extra documents when applying for a home loan, it is not true that they have to meet tougher credit qualification requirements than other borrowers.
As with most applications, self-employed people will definitely improve their chances of being granted a loan if they have a good credit record, and are prepared to put down a deposit.
Basic home loan requirements for self-employed persons:
â€¢ Six months’ bank statements, if applying to more than one bank;
â€¢ A comprehensive income / expenditure statement, especially if the borrower is a first-time buyer or wishes to borrow more than 80 percent of the purchase price; and
â€¢ The borrower’s latest business and/ or personal financial statements as well as the management accounts for the current year, all attested by a qualified professional.
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