Freelancers and Home Loans

Buying a property and applying for a home loan can be quite a demanding process and this process is made even more difficult for freelance applicants. This is largely due to the fact that their monthly income is not ‘secure’ and can fluctuate considerably.

The lack of a guaranteed, steady income from a single source is perceived as increasing the possibility of default by the bank and as such a freelancer will have to provide considerably more paperwork than employed applicants as evidence of their low-risk status. And this paperwork will come under closer scrutiny from the banks. Annoying, but a good deal better than before: previously banks would not even consider home loans for free-lance applicants!

Liz de Mink, owner of De Mink Property Finance, helped open the way for free-lance applicants by devising a method of proving the income of these individuals that the banks found satisfactory.  Starting around 2004 Liz de Mink became the “go to” person for a very large number of clients who work free-lance, particularly in the film industry … Directors, Writers, Producers, Set Stylists, Costume Designers, Chaperons, Make-Up Artists, Cameramen, Gaffers etc  –  De Mink Property Finance has helped them all to secure mortgage finance!  How?  By providing the following advice and assistance:

Keep a running record of all your income

Without a comprehensive record of your income it is hard to provide evidence to the bank that you earn what you claim you earn. This can result in an application being rejected entirely or receiving a significantly reduced loan amount. To ensure that your application has the best chance of being approved you should endeavour to keep an up to date and accurate record of the income you receive.    Each payment into your bank account should be supported by a corresponding invoice detailing who it was from and why you were paid.

If you are using the services of an accountant or financial adviser please check in with them and make sure they are keeping your records and taxes up to date!

Pay your taxes!

If you have hidden some income from the tax man you cannot expect the bank to take that income into consideration when looking at your application. If you are keeping money off the books, which is tax fraud, you cannot  use it for the loan and,  if somehow you do find a way to include it, it might lead the tax man straight to your door!

Also note that some banks require that freelancers submit SARS Notice of Personal Income Tax Assessment (aka the ITA34) along with your application as further proof of the income you receive.

Make sure you have a Credit History.

If you have never had a credit card account, vehicle finance, retail account, cellphone contract etc. you are unlikely to be granted home finance. It might seem counter intuitive going into debt to get more debt, but the repayment of these debts provides proof that you are a responsible user of credit. This is seen as evidence that you are a low risk when it comes to a home loan you are asking the bank to approve. We recommend  that you open two or three accounts with retail stores and get a credit card, then make purchases and pay what you owe on time every month for about six months before applying for a home loan. Remember: this “good” credit payment history tells the bank that you are able to manage your finances responsibly.

And make sure you keep that credit history is squeaky clean!

If your Credit Report reflects regular account unpaids, late payments or arrears, it tells the bank that you are incapable of managing your financial affairs responsibly, and you therefore pose a risk to the bank. They will not lend hundreds of thousands of Rand to anyone who has a poor credit history, no matter how successful you may otherwise be.

Get a FREE pre-qualification assessment from De Mink Property Finance

If you are thinking of purchasing a property but doubt whether you will be able to raise a home loan,  contact us. We will pre-qualify you (i.e. determine whether you will be granted a home loan, and the amount you can expect to be granted) using the same criteria that the banks do. You will then be able to view properties in the appropriate price range, comfortable in the knowledge that your bond will be approved. All of our services are entirely free. Sometimes clients do not immediately meet the criteria for mortgage finance and if they applied for a home loan, it would be declined.

Please be aware that if your application receives a “decline”  this leaves a negative footprint on your credit history and will prejudice future applications for credit. We will not allow that to happen! If you do not qualify, we will tell you upfront and advise you how to get your financial affairs in order. We “walk” the entire journey with you, guide and advise you until you are ready to purchase your own home with a guarantee of bond approval!

Use a mortgage originator like De Mink Property Finance

If you have purchased a property but have not yet approached your bank for the home loan contact us immediately and avoid the unnecessary stress of dealing with branch staff  who are more used to dealing with employed people than those who work freelance and often are not able to look logically at your specific situation. We can also approach multiple banks on your behalf simultaneously (depending on your meeting of bank-specific criteria) which saves you the time of going to each bank individually and completing separate applications.

YOU only have to provide US with the required paperwork once. WE approach all relevant banks on your behalf in order to ensure that we secure the very best deal for you. Remember, different banks assess free-lance applicants in different ways.  So one lender will give you more than another because they apply different criteria to assess your affordability. WE know where to apply for your home loan to ensure approval!

Begin your pre-qualification process today and we will assist you all the way to getting final approval!

 

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