When you apply for a home loan, one of the most important things that the lenders consider before approving your request is your income stability. If you are a salaried employee and work in a reputed MNC, you may get your loan approved without any hassles. However, often freelancers and self-employed individuals struggle to get their loan approved as they don’t have a stable income.
So, in this write-up, we discuss a few vital home loan tips that self-employed and freelancers can use while applying for a home loan.
1. Put down a higher down payment
Generally, lenders in India do not fund 100% of the property’s value. The maximum loan you can get is 80% of the property’s value. This means you must have to pay the remaining 20% from your pocket. This is called down payment, and you must pay the amount upfront; it is a part of the home loan application process.
However, experts recommend putting down a higher down payment than the minimum requirement. And, if you can do that, you can showcase to the lender your strong financial standing. Also, when you pay a higher down payment, the amount you borrow reduces proportionately. This, in turn, will help you repay the amount easily as the EMI is comparatively smaller.
You can use the home loan EMI calculator to determine the exact EMI you must pay for the amount you borrow. The lesser the amount borrowed, the lesser will be EMI.
2. Keep the documents in order
One of the biggest challenges freelancers and self-employed individuals face while applying for a home loan is providing income-related documents. Not being able to oblige with the documentation results in a delay of the loan approval. In some cases, it can even lead to rejection.
So, to avoid such a situation, it is advisable to check the documents list that the specific lender requires and get your papers in order well in advance before you submit the loan application form. Make sure that your business account books are updated and verified by an authorised accountant. Also, keep all your income and loss sheets, steadiness sheets, income-tax documents ready for verification.
If your documents showcase that you have the necessary financial capacity to repay the loan on time, you can get your loan approved without any difficulty.
3. Apply for a joint home loan
One of the easiest ways to get home loan approval and increase your eligibility is to apply for a joint home loan with a family member who has a steady job and income. The co-applicant can be your spouse, sibling or parent.
The financial organisations ultimately determine your eligibility based on your income and repayment capacity. For them, all that matters is whether you would be able to repay the EMIs on time throughout the tenure. So, when you apply for a joint home loan, the lender will consider both the applicants’ income, and you may get your loan approved quickly.
If the co-applicant is a female, the lender may even offer you the loan at the preferential interest rate.
Another effective way to get your home loan approved faster is to get a guarantor to sign the loan documents on your behalf. If for any reason, you are not able to repay the loan, the lender will hold the guarantor to repay the amount.
If you are a freelancer or self-employed individual, getting a home loan is not as hard as it may seem. Use the above tips and take a step closer to making your dream of being a homeowner come true.