All is Not Lost For Self Employed Bond Applicants

All is Not Lost For Self Employed Bond Applicants

New statistics released by ooba www.ooba.co.za - South Africa's leading bond originator - show that self-employed South Africans are finding it increasingly difficult to have their home loan applications approved compared to their employed counterparts.

The statistics show that 57.9% of self-employed applicants had their bond declined in the 2009/10 financial year, an increase of 2.4% compared to 2008/09. This compares with a 3.5% fall in the decline ratio for employed applicants in 2009/10 to 48.1%, from a 51.5% decline ratio the previous year.

According to Saul Geffen, CEO of ooba, self-employed applicants tend to be viewed as a higher risk than employed applicants, due to the perceived instability in income of these individuals, particularly in these challenging economic times.

He says it is important, however, for self-employed applicants not to be disheartened if their bond application is turned down. "There is no doubt it is harder for self-employed applicants to obtain financing for their bond but there are a number of ways to improve the likelihood of gaining approval, one of which is applying through a bond originator."

The wide variances in the credit requirements and decline ratios across the banks illustrate the growing importance of applying to multiple lenders. In the last financial year there was a 32% difference between the banks with the highest and lowest average decline rates.

Geffen says that by using a bond originator, applicants can make simultaneous submissions to lenders, which saves time and avoids duplication of documentation. "Credit and risk profiling of applicants are specific to each bank. It is thus important that applicants are not disheartened by the first decline decision they receive from a lender, and that they persevere with other banks."

The latest statistics from the oobarometer showed that the ratio of applications declined by one lender but approved by another increased significantly, up 11.2% year-on-year to 30.4% in August 2010.

Homebuyers use bond originators to shop around for the best home loan deals and to secure quick approvals. A bond originator's service is at no cost to homebuyers and without any obligation to accept a particular loan sourced.

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