People who are self-employed are often high earners, yet they are placed under much more scrutiny when trying to get a bond to purchase a home. Financial institutions have been trained to view a self-employed individual as a high security risk when it comes to borrowing money. The reason for this is that being self-employed is considered having an unsecure income by the industry.
As a result, if you are self-employed and want to apply for a bond, there is so much more hoops to jump through and paperwork to submit than if you were employed by a company. It would be a good idea to speak to a professional who can advise you on how best to approach applying for a bond to reduce the amount of stress and hassle that you will undoubtedly have to go through. In this way you can prepare yourself administratively as well as mentally for what lies ahead in terms of convincing a financial institution to see your bond application in a favourable light.
What You Need
The most important part of your bond application is that you look good on paper. As a self-employed individual, you will start the process trying to convince the financial institution that you are not a high security risk after all. For this to happen, you will have to supply quite a bit in terms of financial statements and proof of your income and overall stability.
Paperwork that you should get together before even starting your application will include the following:
- Bank statements for the last six months – for your business and personal accounts
- A letter from your accountant confirming your income and gross profit for the past year
- Proof of your income and expenses for the last three months
- Identity document
- Latest income tax certificate
- Three month utility bill
It is unlikely that you will be asked to provide more than the documents outlined above but this could vary depending on the financial institution you approach for a bond. The best you can do is present a well-prepared case as to why you should be considered in a positive light.
A great way to prepare for a meeting with your bank is to speak to professionals in the industry or bond advisors who can help guide you through the process. This will greatly reduce the amount of stress and pressure you might feel and it will also help in your preparation.
