Home Loan for Self Employed

Home Loan for Self-Employed – Features and Benefits

Housing mortgage for self-employed people come with unique features. The highlights of the loan are discussed below in detail.

Upto 90% Financial Coverage

As per the RBI’s latest home loan guidelines, lenders can cover 75%-90% of a home purchase for self-employed borrowers. The down payment obligation for self-employed individuals, thus, ranges between 10%-25%.

Take a look at the financial coverage offered by lenders on different home loan amounts:

• Up to 90% financial coverage for home loans worth ₹30 lakhs or less
• Up to 80% financial coverage for home loans between ₹30 – 75 lakhs
• Up to 75% financial coverage for home loans higher than ₹75 lakhs

Affordable Interest Rates

Lenders offer home loans at fixed or floating rates of interest. Home loans require a borrower to pledge the concerned property with the lender until the loan is fully settled. Hence, these are secured loans. As a result, lenders are willing to offer affordable rates of interest, usually starting from 8.4-8.5% p.a.

Loan Tenure

Home mortgages for self-employed can be settled in as many as 30 years. The tenure offered by a lender depends on a number of factors, such as the loan amount, the borrower’s financial strength and others. 

Comfortable Repayment

Self-employed individuals can repay the loan in equated monthly instalments (EMIs). Lenders also provide prepayment and foreclosure options to ensure faster settlement of loans. However, banks charge a certain fee for extending prepayment/ foreclosure services.

Accessible to All

Home mortgages for the self-employed are available to self-employed professionals (such as doctors, lawyers, CAs etc.) as well as self-employed non-professionals (such as freelancers, vendors, drivers and others). 

Easy Application Process

Lenders accept digital as well as offline applications for home loans. Further, loan seekers can apply individually or jointly at a suitable lender. Housing loans for self-employed are usually approved within a few hours to a few days. 

Tax Benefits

Home loan borrowers can claim up to ₹2 lakhs and ₹1.5 lakhs on interest and principal repayments on their loan. The Income Tax Act of 1961 offers these benefits to home loan borrowers under the concerned sections. 

Tailor Made Loans

Self-employed borrowers come from different financial backgrounds. Upon analysing every candidate’s financial statements and income records, lenders offer tailor-made home loans to cater to the varying needs of their wide customer base.

Home Loan for Self-Employed – Eligibility Criteria

Home loan for self-employed eligibility depends on a number of factors. Take a look at these criteria below and increase your chances of approval.

• Age: Age specifications for a borrower usually range between 21 to 60 years, with 60 years being the maximum age at the time of loan’s maturity. Lenders usually prefer extending home loans to younger candidates as they have much more time and potential to repay the loans.
• Income Levels: Different lenders specify different levels of minimum monthly/ annual income for home loan seekers. Banks check an applicant’s tax filings and financial statements to establish their repayment potential and make a loan offer accordingly.
• Work Experience: Loan providers look for a consistency of operations. Details like work experience help them assess an applicant’s profit-making and risk-management abilities, which ultimately influence their repayment behaviour.
  
• Educational Qualifications: Some self-employed mortgage lenders also consider an applicant’s educational background while reviewing their loan application. 
• Credit Score: Applicants with a credit score of 750 or more are preferred by lenders while approving home loan requests. Credit scores highlight the financial behaviour of an applicant. The higher the rating, the higher will be the chances of approval. 
• Citizenship/ Residential Status: Indian banks provide home loans to Indian citizens only. Some lenders also offer NRI home loans whose terms differ slightly from home loans designed for Indian residents.
• Financial Standing: Lenders demand applicants to disclose their existing debts and assets before approving their loan request. Debts and liabilities higher than a candidate’s income hampers their loan eligibility. While additional income and other assets increase the chances of approval.

Home Loan for Self-Employed – Documents Required

The above-mentioned eligibility criteria are established by home loan documents required for self-employed borrowers. While different banks may demand different documents, a general set of documents are listed below:

• Duly filled loan application form
• PAN card
• Identity Proof: Aadhar card/ Driver’s licence/ Voter’s ID/ other proofs
• Address Proof: Utility bills/ Aadhar card/ Other accepted proofs
• Income Proof: Balance Sheet and P&L account/ Tax returns/ other documents 
• Property related documents 
• Disclosure of existing assets and liabilities
• Passport size photographs

Home Loan Interest Rates for Self-Employed

Urban Money provides quick self-employed mortgage loans to its customers from the top banks and Housing Finance Companies (HFCs). Take a look at the best interest rates available on home loans below:

* The above table highlights the applicable interest rates on the banks’ standard/regular home loan products. The rates may change with a change in the type of home loan.