Many consider that getting a home loan at good interest rates is nearly impossible for startup employees because of unstable income. But that’s not the case as many lenders these days have good home loan options for startup employees or self-employed professionals and non professionals. The criteria, on the other hand, for approving a home loan for self-employed applicant is fairly different.
Are you Eligible?
Eligibility is the major concern for anybody applying for a home loan. Self-employed applicants must also have a good financial standing to back them up when lenders run background checks on their accounts and business profits, loss and other venues. You must have a good CIBIL score (750 and above). This score along with your income, savings, insurances, investments and assets are taken into consideration by lenders before sanctioning your home loan. All these factors help them gauge your repayment capacity.
Age: The minimum age limit for a self-employed home loan applicant is more or less 23 years and can vary from one lender to another. And since it’s more than the minimum age limit for the salaried individuals (usually 18 years), the lenders make up for that in the upper age limit section that is 65 years or retirement, whichever is sooner. Since self-employed and entrepreneurs can work longer than the official retirement age, lenders allow them to leverage the additional years for loan repayment.
Loan Amount: The amount which a self-employed applicant can obtain as home loan is partially based on their income. Other factors that impact the loan amount are CIBIL score, business profits, savings, assets and investments.
Interest Rates: Similar to the loan amount, interest rates also vary as per lenders as well as the applicant. You have the option to choose from fixed and floating interest rates. And some lenders even provide the facility of changing the home loan interest rates from one option to another.
What documents do you have to provide?
Self-employed and startup employees are required to submit an array of documents to show that they are entirely capable of repaying the loan as per the terms stated by lender. You need to show age proof, photo ID proof and residential proof as an individual. In terms of your business, you have to provide last three years’ Income Tax Returns and Balance Sheet, income proof, Profit & Loss Account certified by a CA, bank statements of current and savings accounts for last six months.