One of the main goals of many of us today is to have our own house. For youngsters, it’s a matter of pride to purchase their first house, whereas for middle-aged people, buying a bigger and a better house is a way to upgrade their standard of living. Today, there are plenty of housing schemes and easy availability of home loans that can help in converting this dream into reality. A home loan in gives you that ability to purchase your dream house by giving you access to the required funds at the right time. However, in the present time, getting a mortgage to buy a house is simple for everyone, be it salaried, self-employed or businessmen.
Criteria For Obtaining A Home Loan
Healthy earnings and a sound credit profile are considered as the general requirements for obtaining a home loan, regardless of whether you are salaried or self-employed. Indeed, your earnings reflect your capability to repay the loan, while your credit profile registers your willingness and attitude to repay loans promptly. To determine your eligibility to get a home loan, the lender will ask you to submit certain documents based on your work profile. These documents are mainly required by the lender to ascertain the source, consistency, frequency and continuity of income for the loan to be approved. And therefore, it is essential to understand the difference between salaried and self-employed people for home loans.
For Salaried Individuals
In general, a salaried employee is required to submit several documents including salary slips of the past three months, bank statements of the past six months, and the latest income tax return form. Additionally, an employment letter is also required in case the period of service in the current job is less than a year.
For Self-Employed People
In case of entrepreneurs and self-employed professionals, submission of documentary proof of their own financial position, as well as that of their business or practice, is quintessential to avail a home loan. These documents include income tax returns along with computation of income of the last three assessment years, financial statements certified by auditors, current account statements of the entity and your savings account statements of the past six months.
Details of ongoing loans of both – the individual and the business entity, including the outstanding amount, installments and security are also imperative. Furthermore, a list of Directors and Shareholders with individual shareholding (as certified by a chartered accountant or company secretary), copy of Shop and Establishment license, VAT registration or any other mandatory license, Copy of Partnership Deed, Memorandum of Association and Articles of Association (if applicable) and copies of education qualification and professional practice certificates. Besides these documents, one needs to submit KYC (know your customer) documents along with property-related documents, whether s/he is a salaried or self-employed individual.
Contrary to the general belief, Home Loans are not only anticipated for salaried employees. In fact, self-employed professionals, entrepreneurs and salaried employees, every self-employed individual can make use of housing loans. In fact, the terms and conditions are the same for every individual, however, the earnings and creditworthiness are considered as the main eligibility factors in obtaining home loans. Earnings largely depend on the abilities and experience of the customers, while solvency is a product of discipline and ethics. Creditworthiness is determined on the basis of your credit history. Moreover, lenders have easy access to detailed information on your credit history, i.e. your repayment track record. Moreover, a single delay in repayment may become a hindrance in getting approval for new loans. Therefore, you must make timely repayment of all your dues, be it credit card bills, car loan installments, utility bills or personal loan installments.