Navigating the Bond Application Process as a Self-Employed Individual

Self-employed bond applicaiton

Introduction

Navigating the Bond Application Process as a Self-Employed Individual can be a daunting task. The process often differs from that of salaried employees, requiring a clear understanding of the requirements and meticulous preparation of essential documents. In this blog post, we will delve into the fundamental points that every self-employed person should be aware of when seeking a home loan.

1. Take note of the Minimum Required Documents

When applying for a bond as a self-employed individual who owns their own private company, specific documents are crucial to support your application. These include:

- Two years' worth of audited and signed financial statements and/or management accounts.

- An auditor's letter outlining your monthly income from the business.

- A letter of solvency from the auditor to verify your financial stability.

- A copy of your ID document for identification purposes.

- Six months' worth of business bank statements to showcase your company's financial health.

- Three months' worth of personal bank statements to illustrate your personal financial position.

- A basic list of assets and liabilities to give the bank a clear picture of your overall financial standing.

2. A NB point to note: Reconciliation in the Statements

One of the key elements that banks scrutinize when assessing a self-employed individual's bond application is the reconciliation between declared income, business financials, and bank statements. It is important to note that the banks typically look for the salary or director income component on the financials to establish a steady income stream. Money withdrawn from the loan account is generally not considered part of the income.

3. Seeking Professional Assistance from Bond Originators

Navigating the bond application process alone can be overwhelming. Engaging the services of a bond originator, who is an expert in dealing with banks on behalf of self-employed individuals, can significantly increase your chances of success. Getting a pre-approval done as a self-employed person is highly recommended. These professionals understand the intricacies of the application process and know how to present your financials in the best possible way or to advise you on how to build your business structure for the banks to view it in a positive light.

Conclusion

As a self-employed individual, whether as a sole proprietor, a trust, or a private company (or cc), applying for a bond requires thorough preparation, attention to detail, and expert assistance. Ensuring that all necessary documents are in order, and financial statements are accurately reconciled, will significantly enhance your chances of approval. By working with a bond originator, you can leverage their expertise to navigate the complexities of the application process and move closer to the dream of homeownership. If you are planning to buy a home as a self-employed person, don't hesitate to seek the guidance of a bond originator to increase your chances of success.