Self Employed? Here is how you can get a home loan.

Majority of the work force in our country are self-employed and we admire the people who possess the acumen for entrepreneurship. But when it comes to applying for a home loan, self-employed professionals do not have it easy. They must go through several tiresome documentation processes when compared to salaried employees.

The main concern for the bankers and lenders is the consistency and stability of the business owned by the self-employed individuals. Against all the odds, let's look at how can a self-employed acquire a home loan at ease.

Two categories of Self-employed individuals:

Professionals: Doctors, lawyers, architects, chartered accountants etc.

Non-professionals or Businesspersons: Retailers and small-scale business owners etc.

What are the criteria considered for the self-employed to acquire a home loan?

The financial institutions are lenient in documentation process with the professionals than entrepreneurs and change the terms and conditions accordingly. The lenders also demand the minimum number of years you have been self-employed.
Various banks set different age restrictions, starting from 60 to 70. Maximum loan tenure of 30 years is provided which will help you choose minimum amount of EMI without affecting your living standards.

The interest rates and processing fees are higher for self-employed individuals as the documentation verification process is lengthy and time-consuming.

The other important factors are the applicant's gross annual income, saving habits, credit score, repayment capacity, the number of dependents, assets, liabilities etc.

What are the documents required?

Self-employed must submit more documents than the salaried employees to get their loans sanctioned. Below is the list of required documents.

•    Property documents
•    KYC documents including your identity, residence and age proofs.
•    Income Tax Returns:  This is the main document that the lenders take seriously. You need to submit last two years tax returns in which the bankers analyse your business viability.
•    Statement of current year's loss or profit
•    Last 6-12 month's bank statement
•    Education qualification certificates
•    Co-applicants income details
•    Professional practice certificate
•    Form 16A or Tax deduction certificate

Entrepreneurs who have just started their business might find it difficult to avail a home loan, as the lenders require the minimum of three successful years of business operation. But you may get redemption if you have a sound business plan or the record of good turn over from your business.

Getting a home of your own could be your major ambition in life. If you are self-employed and looking out for one, plan and prepare the above-mentioned documents ready. You can then successfully own a house.

If you would wish to know more about home loans and find the home loan that is right for you, log on to CreditMantri.