Our guide to getting a home loan for the self-employed

Article summary:

• Being self-employed shouldn’t prevent you from owning your dream home.
• While traditional lenders may view self-employed applicants as higher risk, our guide simplifies the home loan process for freelancers, contractors, and business owners.
• We cover the essential documentation you’ll need, strategies to improve your approval chances, and expert tips to secure competitive interest rates.
• With proper preparation and specialist support, self-employed individuals can successfully navigate the home loan application process and achieve homeownership.

Being self-employed shouldn’t stop you from owning the home of your dreams. Where, traditionally, the lack of a single, permanent employer may have made your chances of getting a bond more challenging, thanks to South Africa’s largest home loan comparison service, this is no longer the case.

Home loans for the self-employed: Our guide

1. Get your tax affairs in order.
2. Check your credit record.
3. Separate personal and business expenses.
4. Get pre-approved for a bond.
5. Save for a deposit.
6. Calculate realistic affordability.
7. Work with home loan specialists.

1. Organise your tax Affairs and financial Records

Your financial records demonstrate whether you earn enough to afford your desired property. Managing your income and expenses carefully in the months or years before buying a home is crucial.

Key actions:

• Maintain consistent income patterns where possible.
• Ensure all tax filings are current and compliant.
• Demonstrate sufficient disposable income or monthly savings.

Lenders look for stability and responsible financial management in self-employed applicants.

2. Check your credit record

Before making an offer on a property:

• Run a credit check on yourself (South Africans are entitled to one free check annually)
• Review your credit history for any errors or issues that need resolution
• Establish a credit history through small accounts and credit cards that you pay on time
• Address any judgments against your name (rehabilitation may be possible)

A strong credit score can offset some of the perceived risk associated with self-employment.

3. Clearly Separate Personal and Business Expenses

While tax law allows for certain personal expenses in business accounting, this practice can complicate home loan applications:

• Clearly define your taxable drawing from the business.
• Pay appropriate taxes on your income.
• Service personal expenses with your net income.
• Ensure net profit aligns with your declared earnings.

Banks find it challenging to verify affordability when creative accounting has taken place, so transparency is essential.

4. Get pre-approved for a bond

Pre-approval offers several advantages:

• Confirms your income, expenditure and credit record in advance.
• Allows you to make offers with confidence.
• Defines your price range clearly.
• Strengthens your negotiating position with sellers.

ooba Home Loans can assist with your pre-approval process, including using their Bond Indicator.

5. Save for a substantial deposit

A significant deposit demonstrates:

• Financial responsibility.
• Reduced risk for the lender.
• Commitment to the purchase.
• Potential for better interest rates.

The larger your deposit, the stronger your application appears to lenders.

6. Calculate realistic affordability

When self-employed, income can fluctuate. Conservative affordability calculations are essential:

• Aim to spend no more than 25-30% of your average monthly income on loan repayments.
• Account for all property-related expenses (taxes, insurance, maintenance).
• Consider business cycle fluctuations in your industry.
• Maintain a financial buffer for income variations.

Use ooba’s affordability calculator to determine a realistic price range.

7. Work with Home Loan Specialists

Expert assistance can significantly improve approval chances:

• Bond originators apply to multiple banks on your behalf.
• Your application is presented in the best possible light.
• You only complete paperwork once.
• Professional guidance throughout the process at no extra cost.

Selecting Properties That Match Your Self-Employed Profile

When shortlisting properties, self-employed individuals should consider:

• Long-term affordability based on average income over multiple years, not just current earnings.
• Total property costs including bond repayments, rates, taxes, levies, and insurance.
• Maintenance requirements and associated costs.
• Location factors that may impact property value over time.
• Income flexibility to accommodate business cycles and income variations.

A property that works with your self-employed financial profile will provide security rather than financial strain.

How ooba Home Loans Can Help Self-Employed Applicants

As South Africa’s largest home loan comparison service, ooba home loans offers specialised support for self-employed applicants:

Multiple bank applications with different lending criteria to maximize approval chances.
Free online tools including calculators and the Bond Indicator, for pre-qualification.
Expert negotiations  for better interest rates.
Guidance through documentation requirements specific to self-employed individuals.
Personalised support throughout the entire application process.

Conclusion: Taking the Next Steps

Being self-employed shouldn’t stop you from owning your dream home. With proper preparation, accurate documentation, and expert assistance, you can navigate the home loan application process successfully.

Ready to start your home-buying journey? Take these steps:

1. Organise your financial documentation with your accountant.
2. Check your credit score and address any issues.
3. Use ooba’s home loan calculators to determine your price range.
4. Get pre-approved by contacting an expert at ooba Home Loans or by using our free, online pre-approval tool, the Bond Indicator.
5. Apply for a home loan with expert assistance.

Get a free home loan comparison with quotes from multiple banks to find your best option.