Many people think that applying for a bond involves reams of paperwork. If you work with a bond originator, the good news is that you can submit your paperwork online at a time that suits you, says Bradd Bendall, BetterBond CEO (interim). “BetterBond will submit your application to multiple banks on your behalf, using the one set of information you have provided. This saves you time and is far more convenient than submitting a new pack of documents each time you apply for finance.”
It’s advisable to first apply for pre-approval, online and at no cost, as you submit the same documents as you would for a bond application – just without the signed offer to purchase, explains Bendall. “And as the information is captured by a consultant, it is stored on your profile and can be used if you find your dream home immediately and sign an OTP, or just topped up with the documents for the current month if the search takes a little longer after being pre-approved”.
The pre-approval application includes a credit check, so you will know whether you need to wait and improve your credit score before you apply for a bond. Having a good credit score will improve your chances of bond approval.
Although pre-approval does not mean that the bank has approved your bond application, it does give you a good indication of what the big banks will be willing to offer you based on your affordability, explains Bendall. “It also proves to the seller that you are a serious buyer with the financial means to buy the home. This will strengthen your hand when it comes to making an offer on your chosen home; giving you the competitive edge when the seller has to consider other offers.”
Full-time employment application
Once you have signed your offer to purchase, these are the documents you will need to apply for a bond if you are employed full time:
- Completed application form
- Offer to purchase
- Copy of ID: smartcard must be front and back
- Payslips:
– latest payslip for fixed income
– latest six months for variable income
- Bank statements: the last three months, which can be sourced with customer consent through the IDX (Electronic Bank Statement System) for Absa, Nedbank and Standard Bank customers.
- Employment contract: only if you have been in current employment for less than three months.
Self-employed application
You can still apply for a bond if you are self-employed, says Bendall. “As with any bond application, make sure your tax and financial affairs are in order and updated. Keep personal and business income and expenses separate. It’s also helpful to be able to put down a deposit.”
Banks want to see a proven history of being able to manage finances responsibly, so the list of documents you will need to apply for a bond if you are self-employed include:
- Completed application form
- Offer to purchase
- Signed and dated personal statement of assets and liabilities
- Signed and dated personal statement of income and expenses
- Copy of ID: smart card must be front and back
- Bank statements
– Personal bank statements. Last three months, which can be sourced with customer consent through the IDX (Electronic Bank Statement System) for Absa, Nedbank and Standard Bank customers
– Business bank statements. Latest six months business bank statements (cannot be drawn using the IDX)
- Last two years audited and signed financials (not older than six months from last reporting period)
- Up to date signed management accounts (if financials are older than six months)
- Auditors letter of income
- Auditors letter to confirm shareholding percentage (if business is a (Pty) Ltd)
Other applications
Temporary residents living in South Africa and applying for a bond will need to include a copy of their passport and work permit or visa in their application pack. They should also have a valid signed employment contract. The same requirements apply to South African citizens living overseas who want to apply for a bond.
Buyers applying as a close corporation (CC) or a trust should also include a copy of the Trust document and a letter of authority. If the Trust or CC is trading, include two years’ signed financials and management accounts. You will also need a copy of each of the trustees, members or directors involved. If any of these members are self-employed, they will need additional information as with self-employed applicants. Other documents include the company or CC registration document; the company, CC or Trust resolution signed by all directors, members or trustees. If the entity is no-trading, a solvency certificate is required. Three months’ bank statements must also be provided.
Best practice
Before applying for a bond, make sure you have all your supporting documents ready, especially the four key documents needed for all applications: a signed offer to purchase, copy of ID, salary slips and bank statements. Also bear in mind that you need to make sure your tax and financial statements are up to date and that you have a good credit rating.
“Having some funds to put towards a deposit will also count in your favour when applying for a bond. Furthermore, our expert home loan consultants can assist you with what is required if you put in an offer that is accepted and need to take the next step in securing finance,” concludes Bendall.