Self-employed? Get a bond

Self-employed? Get a bond
http://personalfinance.iafrica.com/banking/2571040.htm

A growing number of people who are self employed, with incomes dependant on fluctuating commissions, face huge difficulties in becoming homeowners, says Lanice Steward, MD of the Cape Peninsula estate agency Anne Porter Knight Frank.

This, she says, is because the banks, complying with the National Credit Act, have to be especially careful about lending money to people who are employed in positions which might be considered insecure.

“There is,” said Steward, “a certain arbitrariness about the concept that a self-employed person, especially one on short term contracts, is not a good security risk because many of these people are high income earners — but that is the way the banks feel obliged to act.”

If a self employed person does decide to apply for a bond he should, says Steward, “get all his ducks in a row”.

(via Instapaper)

If you are self-employed and looking for a home loan I will highly recommend that you read this article. They spell out exactly what the banks require from self-employed applicants. 

Unfortunately this is not the best of news, since people working for themself for less than 3 years or without any financial statements will find it extremely hard to get a bond approved, regardless of your income.