How to apply for a loan when you are self-employed

For a professional, business owner or self-employed, it is a very cumbersome process to get an approval on home loan. This is majorly because of lack of financial security, as there is non-consistency in the money flow into their account. They can also close down their business at any point of time. Bank also look into the matter of business status and risk factors involved in it. On the other hand, bank is looking for a guarantee as job stability and the pay slips (in case of salaried employees) to ensure that repayment of the money lend, but a business person has to show so many documents to verify the profitable running. Failing to do the same usually faces a trouble situation to get approval on home loan. So one has to get ready with all the original documents specified by the bank/ housing finance companies to get an on time approval.
Some of the self-employed professional like CA, doctors and Architects, generally have a smoother process for approval of home loan, than the other self-employed business persons, because bank feels more comfortable with them to get repaid, because of their education and profession.

Document specified for Self Employed Professionals:
Following are the documents asked by banks for home loans for Self Employed Professionals:

  • Duly Signed Application Form with Passport Size Picture
  • KYC (know your customer) Norms including photo identity, address and Age Proof
  • Certificate of Educational qualification
  • Documents of type of existing business (Deeds, MOU, Shop Act etc.)
  • Business Profile on the Letter Head of the firm
  • Bank Statement (last one year’s)
  • Latest 2 years Income Tax Returns with computation of Income
  • Latest 2 years CA Certified / Audited Balance Sheet and Profit & Loss Account
  • NOC from other loans (If any)
  • Documents Checklist (provided by the bank)
  • Home Loan Processing Fee by cheque only

Document specified for Self Employed Business Persons: All the self-employed businessmen and entrepreneurs are advised to maintain their business transactions transparent as it can help for easier facilitation of a home loan. Fresh entrepreneur faces usually a difficult process in getting home loans approval.  Moreover, as according to the bank norms, 3 years ITR is a must so, start-up entrepreneur will have to wait for at least 2 years to get a home loan after starting the business. But as, there are always some exceptions. Some newly start-up companies can avail home loan, if they can impress the bank’s credit manager by a great business plan, or if manager is confident about the success rate, S/he waive off certain rule and also one has to have a good back up guarantor like working parents or spouse.

Following are the documents required for sanctioning home loans for self-employed business person

  • Duly Signed Application Form with Passport Size Picture
  • KYC (know your customer) Norms including photo identity, address and Age Proof:
  • Latest Bank Statement (for last 2 years )
  • Business Profile on the Letter Head of the firm
  • Documents of type of existing business
  • Copy of Business plan
  • Copy of Shop & Establishment License / VAT Registration or any other mandatory license / registration
  • Copy of the Partnership Deed (if applicable)
  • 3 years Income Tax Returns with computation of Income
  • 3 years CA Certified / Audited Balance Sheet and Profit & Loss Account
  • Cheque for Home Loan Processing Fee