Self – employment is when an individual works for himself/herself rather than being employed for another company. Architects, doctors, sole – proprietors and many other professions fall into this category. A self -employed individual can acquire a loan provided he/she is able to prove his/her income stability.
Self-employed individuals will have to prove their ability to repay the loan that they have borrowed with income tax returns and audited financial statements of the business they run, by preparing and submitting it to the income tax department.
Yes, self-employed individuals can self-finance the house they buy even without the help of family money and the obligations that come along with it. If you are a self-employed individual seeking a home loan for the first time, you need to get your documents organized.
Lenders include banks and NBFCs that offer ample home loan opportunities to fit the needs of a self-employed individual seeking to self-finance their first house, which is where the following factors determine whether you eligible or non-eligible for a home loan
Many banks or NBFCs are flexible when it comes to loan repayment today. Some banks let you begin the EMI repayment late, while some also offer the option of taking a loan with decreasing EMIs. The Home Down Payment Assistance Program by HomeCapital also supports a self-employed individual who is planning to self-finance his first home with the necessary down payment funding. Here are a few EMI repayment options available through various banks and NBFCs:
Some banks and NBFCs offer this option where the borrower gets a grace period between 36 – 60 months where only the pre-EMI interest is to be paid. This loan is mostly preferred by young working professionals between 21 – 45 years of age with a capacity to increase their current income as this sort of a repayment increases with time.
This type of a home loan is the exact opposite of the delayed home loan EMI repayment, where the EMI decreases over time, during the tenure and is preferred by individuals at a later stage in life, nearing retirement. The interest in the initial years will be higher which means an individual must plan his finances well in advance.
This type of a home loan extends the repayment tenure up to 65 years of age for a maximum loan of ₹75 lakhs and is normally granted to young working professionals up to 48 years of age. The interest in this type of a loan that requires a guarantee provided by India Mortgage Guarantee Corporation with an additional charge of 1 – 2 percent of the total loan.
A bank is a preferred option when it comes to home loans because the interest rates are lowered while NBFCs are equally preferred because of their flexibility but with higher interest rates. The applicant must weigh his/her pros and cons before choosing his/her loan scheme, devise a payment plan and then approach a bank or an NBFC before settling for any of the options.
Individuals savings come into play when buying a home loan. Some banks or NBFCs customize home loans according to a self-employed person’s seasonal income periods and secure repayment during that time as well. However, since savings are not sufficient for down payments today which is when you can think of alternate down payment options to self-finance your first home instead of borrowing money from family members.
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