If you are self-employed, a home loan can help you purchase your new house while keeping your funds free for business or other priorities. With a variety of offers from different lenders, it’s easy to find one that suits you using a Home Loan eligibility calculator and apply for it.
However, before applying for a Home Loan, it is important to have a stable income source and a disciplined financial background. Additionally, you must collect certain documents and provide them when required for a smooth, hassle-free experience. Let’s take a closer look at these steps to ensure you receive an offer of your preference with low Home Loan interestrates.
Documents needed for a Home Loan if you are self-employed
To begin your loan application, you will need to complete the application form with correct details and submit the required documents, which include the following:
Proof of identity
Lenders confirm your identity using documents such as a passport, driving licence, or government employee ID.
Proof of address
For address proof, you can share your Aadhaar card, voter ID, or recent utility bills that show your current residence.
Date of birth proof
To confirm your age, use your Aadhaar card, driving licence, birth certificate, or 10th-grade marksheet.
Proof of income
For a self-employed individual, showing steady income with two years’ tax returns, a Profit and Loss statement, a balance sheet, and six months’ bank statements is required as proof of income.
Employment-related documents
You will need documents proving your business exists, such as registration papers, shop establishment certificates and past tax filings.
Property-related documents
A sale agreement, title deed, and an approved building plan are ideal proof for your property’s legal status.
Signature proof
You can verify your signature using your passport, PAN card, or a notarised affidavit, ensuring it matches your loan documents.
Documents for loan disbursement
Submit the signed loan agreement, ECS or NACH form and final property papers registered in your name.
Income proof strategies for a Home Loan for the self-employed
Maintaining financial discipline
Being self-employed means you must stay organised with your finances. Keep business and personal accounts separate, pay taxes on time and record everything clearly to demonstrate your financial dependability to secure low Home Loan interest rates.
Manage debt properly
Build your financial strength by maintaining a good credit score and managing debts responsibly.
Adding a co-applicant
Having a co-applicant with a stable income and good credit scores can make lenders feel more confident and improve your loan approval chances.
Declaring all income sources
Be honest about all your income sources, including side earnings. Document everything with bank statements or contracts for easy income verification.
Applying strategically and on time
Apply for a Home Loan when your income looks strong in recent tax filings. Wait for any big business or financial changes to settle first.
Using a Home Loan eligibility calculator
It’s recommended to use such a financial tool to see how much you can realistically borrow based on your income and expenses.
Countering variable income
If your income changes monthly, show an average from the past two years. Consistent earnings over time reassure lenders about your monetary stability.
Managing low or no income proof
You can look for loans based on bank statements or provide collateral if you have limited income proof. Some lenders also accept GST returns or work contracts.
Conclusion
Obtaining a Home Loan for self-employed individuals is simple, provided you can demonstrate a strong financial situation and provide the required documents. Remember to focus on your budget and lifestyle when choosing a loan and securing your future.
