Buying a home is one of the biggest achievements in a person’s life. However, affordability is often a hindrance for many self-employed individuals, freelancers, contract workers, and piece-job workers, and this can often leave aspiring homeowners despondent.
Banks have recognised multiple income streams to help customers own the home of their dreams. While having a formal employment status has often been a barrier for aspiring homeowners, banks such as FNB do consider multiple income streams to boost home loan affordability. For instance, Entry Market customers earning up to R7 500, made up of the following: R5 000 from an employer and R2 500 from a side hustle, with the relevant evidence to support, will be considered as monthly income towards the affordability of a home loan application.
Owning a home is an emotional experience for families, but many are unaware that they can pool multiple sources of income together to boost their chances of qualifying for a home loan. Our consideration of multiple income sources is due to our realisation that South Africa has a significant portion of consumers who do not earn enough to meet the minimum requirements for credit products such as a home loan, even though they have an impeccable credit record and a proven source of income.
Whether you’re self-employed, a freelancer, contractor, or a part-time worker and you earn an income from one or more sources, or your income fluctuates from month to month, or even every six months; you would need to show a track record of an income and bank statements can usually prove this. While we recognise multiple income streams, we also need to be a responsible lender when granting credit to customers.
FNB shares four key considerations for consumers to remember when purchasing a home:
- Prepare your supporting material: Before applying for a home loan, make sure you have the necessary documents, such as proof of income. Freelancers, contract workers and piece-job workers must have documentation that confirms the source of income. If you are a gardener or domestic worker with multiple clients, each of them can write a letter or an affidavit confirming that they are using your services, for how long and for what fee.
- Check your creditworthiness: A good credit history increases your chances of getting a home loan. Credit bureaus will keep track of your personal credit obligations and rate your debt repayment performance using a credit score chart that shows how well you manage your debt. Always make payments on time and in full. Customers who use the FNB App can access nav>> Money on the FNB App to improve the way they manage their money.
- Get pre-approval: A home loan pre-approval helps you to shop with confidence knowing how much you potentially qualify for. A pre-approval is a good indicator of the amount of home loan the bank may grant you. This also means that when you go house-hunting, you are looking at the right price range for your budget.
- Save for a deposit: While a bank may still grant a 100% home loan with no deposit required, we recommend that first-time home buyers con-sider putting down at least a 10% deposit to ensure that their home loan repayments are manageable. A deposit increases your chances of getting a home loan because it demonstrates that you are financially responsible.
First-time home buyers should also consider the Finance Linked Individual Subsidy Programme, a housing subsidy for first-time home buyers to help with the purchase of a home.
We help our customers through this process to boost their chances of owning a home.
The National Treasury’s 2020 announcement to waive transfer duties for properties priced at R1-million or less is another benefit that could help to lower the cost of homeownership.
- Potwana is FNB Entry Market CEO
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