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Be your own boss and qualify for a bond

Having your own business or a freelance career is no longer a barrier to homeownership. BetterBond data shows that there has been an upswing in bond applications from self-employed buyers, increasing from 9% in 2020 to almost 11% in September this year.

“This growth aligns with BrandMapp research of households with a monthly income of more than R10 000 which found that self-employment in this income bracket has increased by 1% in the past year to 15% in 2022,” says Carl Coetzee, CEO of BetterBond. According to the World Bank, just over 15.5% of South Africans are self-employed. While this trend is driven largely by the shortage of formal employment opportunities, there has been a noticeable shift among middle-class South Africans to seek self-employment or freelance work as an alternative to formal employment. BrandMapp reports that the percentage of South Africans with full-time, formal employment has dropped 6% to 56% in the past year.

There are three regions showing greater volumes of applications from self-employed buyers, says Coetzee. BetterBond data for September shows the Greater Pretoria area has the largest intake of self-employed applicants at 13%, followed by KwaZulu-Natal where self-employed applicants account for 11.51% of all bond applications. In the Western Cape, self-employed applications account for just over 11%, says Coetzee. This suggests a change in the long-held belief that without formal employment, a homebuyer could struggle to get a bond. “With the number of entrepreneurs on the rise, we expect to see these application volumes increase even further,” says Coetzee.

“Interestingly, the increase in self-employed applicants mirrors the growth in relocation sales in the country. The latest FNB Property Barometer reports an increase in relocation sales from 8% in the first quarter of 2020 to 14% in the third quarter of this year.” Much of these results from buyers moving from Gauteng to the North West Province, to Ballito in Kwazulu-Natal or George, Mossel Bay and Hermanus in the Western Cape.

Self-employed buyers can improve their chances of securing a bond. Coetzee advises, “Make sure your tax and financial affairs are in order and up to date. Ideally, keep your personal and business income and expenses separate as banks will look closely at affordability and it’s best to present them with the clearest possible picture. Check your credit record. If possible, save as much as you can towards a deposit. “The objective is to show that you have a proven history of managing your finances responsibly – making the argument that you’re worth partnering with from the banks’ point of view. Each home loan application is reviewed on merit. It’s advisable to work with a bond originator who has the expertise to manage the process on your behalf, especially if you are self-employed,” says Coetzee. “Being your own boss should never stand in your way of owning your own home.”