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How To Increase Your Chances Of Getting A Home Loan If You’re Self-Employed

How To Increase Your Chances Of Getting A Home Loan If You're Self-Employed

The easiest way to get money to invest in property is to ask the bank. After all, most of us don’t have investors we can approach to finance our ventures. However, banks have become very strict especially if you run your own business.

In fact, many business owners think it’s downright impossible to get a home loan. But I’ve got great news. It’s not! If you follow the three steps I’m about to give you, you see that it’s actually easy to get that loan approved.

 

 

1. Start working for your business

It’s time to stop running your business through your own personal accounts. In other words, stop working for yourself. Instead, register your business and open a bank account for it. There’s also something important most business owners overlook. Filling in ‘Self-Employed’ on your application form – avoid this. You’re not ‘self-employed’ anymore. Your company employs you as the ‘General Manager’ or the ‘CEO’.

2. Stop living off your business

Many entrepreneurs take money from their business as they need it. This is not only bad business practice but will also make banks stamp ‘rejected’ on your loan application… So, start paying yourself a regular salary from your business every month and give yourself payslips. It’s easy to establish your credit worthiness if the banks see a regular salary being paid into your bank account every month.

You don’t have to play with number by paying yourself a huge salary once off. Pay a consistent amount on the same day of the month every month. What the bank wants is to see is at least a three months bank statements. Just ensure your business can afford to pay the salary you pay yourself should they require your company documents.

3. Listen to the advice no one wants to hear…

So you want to buy the perfect investment property you’ve just found priced at R500,000. Your monthly repayment is R4,660 per month. There’s one important principle every property investor should follow: You have to be able to pay the property’s payments when there’s no tenant in it. So, before you buy, start saving the monthly repayment amount that covers at least 3 months repayments. If you can, save for a year and put it down as a deposit. It will also lower your loan repayment by about 10%.

However, don’t offer to pay the 10% deposit up front just in case they require as security to give you the loan. But if they don’t, you can make an offer of a 10% deposit if they’ll drop your interest rate. 

If you follow these simple steps, your employment status won’t hinder you in a loan application ever again…

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