PROPERTY NEWS - Today's professional climate encourages innovation and entrepreneurship, especially among the millennial generation that is now aged between 26 and 41.
This same entrepreneurial-minded generation has become one of the largest buying segments in the property sector.
The challenge they face is acquiring the necessary bond approval to make their home-owning dreams come true.
"The process of a bond application looks different for those who are self-employed," explains Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.
"Before they begin the house-hunting journey, I would encourage self-employed buyers to set up an appointment with a bond originator who can provide them with a pre-approval so that they know what they qualify for before getting their hopes set on a property they cannot actually afford," he recommends.
Carl Coetzee, CEO of BetterBond, explains that each bond application is unique, especially for entrepreneurs, so it's advisable to work with a bond originator who has the expertise to manage the process on the buyer's behalf.
"The application need not be a cumbersome exercise. BetterBond can guide you through the process and submit one set of paperwork to multiple banks on your behalf and at no cost," he explains.
Coetzee says the following documents will help streamline an entrepreneur's bond application process:
• A completed and signed application form.
• Your offer to purchase.
• A copy of your ID. If you are using a smart card, include a copy of the front and back.
• A set of three years' signed financials, not more than six months old.
• An auditor's letter stating your income, and the expenses paid for by the business.
• A signed and dated personal statement of assets and liabilities, and a signed and dated statement of personal income versus expenses.
• Personal bank statements for the last three months and your business bank statements for the latest six months.
• Your latest IT34 from Sars. This is not mandatory on submission, but may be requested by the bank.
When assessing your application, banks will also need to assess whether there is a risk that you might default on payments due to cash flow issues in your business.
"If you can prove a history of managing your finances responsibly, banks will consider your application more favourably. They want to see that you have a constant income stream and that you can manage this effectively. This means making sure that your tax and financial statements are up to date," explains Coetzee.
To further improve your chances of securing a bond if you are self-employed, Coetzee says that if possible, you should separate your business and personal income and expenses.
"Banks will look at affordability, so separating your expenses will present a clear financial picture of what you can pay on a bond each month."
Once the necessary pre-approval is in place, Goslett recommends setting up an appointment with a local real estate professional.
"My advice to buyers is to partner with a RE/MAX agent who can not only guide you through the process of buying a home, but might also be privy to listings before they are uploaded to a property portal. It is not uncommon to have a property sell before it even reaches the internet. Partnering with a real estate agent allows you first pick of any suitable listing as soon as they enter the market, which increases your chances of finding the home of your dreams," Goslett says.
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