Home Loans for Self-employed
Are you self-employed and worried about your home loan approval?
It’s a common perception that self-employed individuals face difficulties in getting approved for a home loan.
However, this is not true! Lenders have their predefined set of norms and yeah, they lend to self-employed as well. But they have some specific eligibility criteria, which an applicant needs to fulfil to get approved for a home loan. This eligibility criterion varies from lender to lender and from salaried employees to self-employed individuals as well.
- Self-employed professionals such as doctors, lawyers, accountants and non-professionals such as traders and businessmen can avail home loans easily.
- Many lenders offer customized home loans to suit the requirements of Self-employed applicants.
- Lenders check for the documents such as income tax returns and P&L account statements and balance sheets of the business entity of the applicant to determine their income & loan eligibility.
Home loans are bigger commitments and hence lenders feel it risky to lend to a self-employed as they don’t have a well defined source and amount of income.
To be on the safer side, lenders ask for these documents from a self-employed person while applying for a home loan:
- Personal identity proof
- Savings and current account bank statements of the last six months.
- PAN card details
- Educational and professional qualification certificates,
- Residential address proof,
- Last three years’ ITRs (income tax returns) and
- Audited financial statements (attested by a chartered accountant) and proof of the business’ existence such as business licensed
- P&L statement of the business.
Steps to Ensure Your Home Loan Application is Accepted
- Add a Co-Applicant to your Home Loan Application
If you are a self-employed person then adding a co-applicant can help you to get approved for a home loan. Adding a co-borrower to your home loan application also increases your home loan eligibility. This happens because when you are self-employed and applies for a home loan lender are not sure about the repayment, but when there is a co-borrower for the same loan, they get confidence to lend as now two-person is responsible to repay the loan.
2. Co-Borrower being the Co-Owner of the Property
When the co-borrower who applied for a home loan with you is also the co-owner of the property, then you are in a very good position. Banks and NBFCs approve a home loan to such applicants easily. But apart from this, they do need to fulfil other eligibility criteria too.
3. Having a Guarantor for Your Home Loan
Having a guarantor for your home loan application is also one of the factors which can ensure that your home loan application will be accepted by the lender. Having a guarantor for a loan reduces the risk factor involved to the lenders. After having a guarantor lender are assured for the repayment, as in some cases when the borrower is not able to repay the loan, then they can recover from the guarantor.
Home Loan approval for self-employed is no longer a concern. Follow the above-mentioned points while applying for your home loan and get ensure for the approval.