How to Choose Home Loan for Self-Employed Professionals?
Being a self-employed professional comes with its own set of benefits. Right from rejoicing the joy of working on your own terms to ensuring that each and every client gets the needed time and attention, you can do it all by yourself. However, can the same be said with respect to getting a Home Loan?
While there are numerous perks enjoyed by self-employed professionals in other aspects of life, when it comes to Getting a Home Loan, it wouldn’t be wrong to say that things are comparatively easier for their salaried counterparts. This difference can often be attributed to enhanced job stability as well as the comparatively more reliable flow of income for the latter.
If you are a professional such as a Doctor, a Lawyer, an Architect,a Chartered Accountant or any other profession with a practice of your own, you can conveniently find a reputable Home Loan such as an ICICI Home Loan or an HDFC Home Loan. Here is a step-by-step guide to choose the right loan for self employed professionals.
1. Keep Your Documents Ready
You are required to submit a copy of any one of the government-issued identification documents such as Passport, Driving Licence, Birth Certificate, Ration Card or Aadhaar Card as your identity proof.
Next, you require one proof for age. Provide a copy of a government-issued ID, with the date of birth clearly indicated.
Verification of Employment
You will be required to furnish your Professional Certificate as well as Registration Documentation, as a proof of your employment.
Proof of Income
While salaried individuals simply need to furnish their salary slip as a proof of their income, you will need to provide a number of documents to this end. These include –
- Income Tax Returns for the past two years
- Statement of current year’s Profit or Loss
- Last 6-12 months bank statement
- Form 16A or Tax deduction certificate
Keeping the documents ready quickens your application process and will have a positive impact on the approval of the same.
2. See If You are in the Right Age Range
Since Home Loans are long terms loans, often involving a hefty sum of money, most banks offer these to individuals who are between the ages of 21 to 65 years. However, the acceptable age range may differ from one bank to another. For instance, ICICI Home Loans for Self-Employed Professionals are available for individuals in the age bracket of 28 to 65 years of age, wherein for Doctors, the minimum age limit has been reduced to 25.
Likewise, Axis Bank Home Loan can be enjoyed by individuals who are in the age range of 24-65 years. Hence, it will pay you to analyse various Home Loan offers and pick the one that best suits your age.
3. Employment History
More often than not, banks prefer lending to individuals with at least 3 years of experience in their current field of work. In some cases, banks are also inclined to only approve a Home Loan application, if the applicant has worked in a given city or area for a continued period of time.
4. Turnover Computation
As a self-employed professional, the only way for a lender to gauge your repayment capacity is by analysing your annual returns. For ICICI Home Loan, your minimum annual turnover must be Rs. 15 Lakh, while for IndusInd it should be Rs. 4.8 Lakh. Similarly, for Axis Bank Home Loan for self-employed professionals, the minimum income must be Rs. 2.4 lakh per annum. You must choose a home loan provider, depending on your annual income.
5. Loan to Value Ratio
In a vast majority of cases, banks restrict the Home Loan amount lent to self-employed professionals to 70% of the market value of the property. In case the loan amount is fairly substantial and goes beyond Rs. 75 Lakh, the LTV can be raised to up to 85 % or in some cases even 90%, albeit that is subject to the lender’s prerogative.
Hence, it is advisable that before you approach a bank for your Home Loan, you must have the down payment for the purchase ready, lest it will result in an overall delay in the approval of your Home Loan.
All the above-mentioned aspects withstanding, it is also crucial for you to maintain a good credit score. Right from ensuring that your bank statements are clean, to paying all your short term debts such as Credit Card bills and Personal Loans in time are quintessential to being a responsible borrower. This combined with the other aspects in your profile will ensure that getting a Home Loan is easy.
So, wait no more before you pick the ideal Home Loan provider on the basis of the above-mentioned criteria and revel in a much-deserved pleasure of purchasing your own abode.
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