Sometimes, self-employed individuals find it difficult to get their housing loan application approved. Are you also struggling with yours, having approached different lenders with no positive outcome in sight? You have a good credit score and are the proud owner of a budding start-up, then why the problems with loan sanctioning? The truth is, there’s a lot that goes into the approval of home loan for self-employed individuals. Let us find out all about it in details.
Eligibility criteria for self-employed individuals
For most lending institutions, the home loan eligibility criteria for self-employed individuals will be as follows –
- The loan applicant must be between 24 to 65 years of age (the upper limit is for the time of maturity)
- The applicant must have a high CIBIL or credit score, preferably 750 or above
- All self-employed applicants must have a minimum work experience of 3 years in their current line of work
List of documents needed
Self-employed home loan applicants can have their loan sanctioned after submission of the loan application form along with the following documents –
- Address proof documents – Copy of bank statements, utility bills, property registration documents, voter ID, or property tax receipt
- Business proof documents – Copy of ITR of the past two years, business profile on letterhead, or certificate of commencement of business
- Income proof documents – Copy of Profit & Loss A/C statement for the past three years, Bank statements for the past six months, or operative current account statement for the past six months
- Existing loan details – This is to be provided through bank statements
- Processing fee cheque – This is to be issued from the applicant’s business account
Factors that ensure your loan application is accepted
- Maintaining a high CIBIL score
Lenders will evaluate your credit history before they sanction your loan. One simple way to understand whether or not you meet a lender’s requirements is to look at your CIBIL or credit score. A good credit score, one that is at least 750 or above, will convince the lender of your credit-worthiness and get your loan application approved.
- Self-employed professionals
In a lot of cases, it is easier for self-employed professionals such as doctors, chartered accountants, and lawyers to get their loan sanctioned. This is mainly because these self-employed professionals typically possess specialized skills, have domain knowledge, and, most importantly, have a steady source of income. Those with self-employed professions having fluctuating monthly income may find it challenging to convince the lender to sanction their home loan.
- Company stability and tax returns
A lot of self-employed individuals’ loan applications are rejected owing to the instability of the company and less-than-impressive financial statements. The key here is to ensure that your company has been stable for at least 3 years in the market, with the accounts showing at least 2 years of growing profits for easy housing loan approval.
Confident that your housing loan will be sanctioned? That’s great! However, to ensure a smooth repayment experience, do make sure you use useful online tools such as the home loan EMI calculator – Simply adjust the principal and tenure values and arrive at an EMI amount you are comfortable repaying.
