Home loan for self employed – Part III

Updated on December 3, 20183 mins read
documents for self employed

A complete checklist of documents for self employed to apply for home loan.

Our country is a mixed platter of traditional businesses and new age start ups. Whether a family business, new company or independent practice, if you are running your own show independently, kudos to you! 

While it must have been exciting to build your business single-handed, you may have found that practical matters like getting a home loan have not been very easy in the past. Fortunately even this is changing for the better now.

Banks are now happy to give loans to entrepreneurs, business owners, self employed and professionals. Of course they will run their checks and due diligence to make sure their loan is safe.   

Over the past weeks we have shared different aspects of home loans to self employed and professionals. In Home loans for self employed – Part I and Home loans for self employed- Part II  we covered aspects like who is considered self employed, who is a professional, what are some profiles banks stay away from, how you should maintain records of your income etc.

You would know by now, banks like to evaluate your case a bit more in depth if you are applying for a home loan and you are self employed. But this is not because they are suspicious. It is only because every business comes with different challenges. The decision on eligibility is not as straight forward as a salaried individual. So the bank will ask you for a number of documents to make sure your case is solid. Let’s take a look at what documents for self employed need to put together when applying for a home loan:

Basic KYC documents

  • Passport size photograph for all applicants  
  • Pan card copy for all applicants  
  • Present address proof of
    all applicants
  • Permanent address proof for
    all applicants

 

Business/Company address proof

  • Profile of business on company letterhead
  • MOA & AOA of the company
  • Gumasta licence
  • Municipal receipt of registration
  • Partnership deed
  • Certificate of incorporate or MOA or MOU

 

Charges

  • Cheque for Processing fee cheque    
  • Check for Administration charge
  • Cash/cheque for Franking, notary and other charges

 

Property Documents:

  • Franked sale agreement
  • Cost Break up issued by the builder
  • Originals receipts of own contribution
  • Bank statement showing payment of contribution
  • Demand Letter issued by the builder
  • No Objection Certificate by the society
  • Copy of proposed sale deed for new properties
  • No Objection Certificate from bank if the project is funded by
    another bank

You can generate no objection certificate your self in few simple steps and have it signed by the right people.

 

Proof of income

  • 6-9 months bank statements
  • Current account, Savings account bank statements
  • Income tax returns for past 3 years (ITR)
  • If you file under section 44 AD then ITR would not be required
  • Income and expense statement
  • Or Profit and loss statement
  • If income is high value, then audited P&L statement
  • Statement of net worth certified by a CA

 

Proof of obligations

  • Most banks look at only the large value loans against your name.
  • Sanction letters from banks for your existing loans
  • Bank statements that reflect the loan installments

 

Getting a new home loan or switching your existing home loan to another bank is not very difficult these days. But your main objective will be to get high amount of loan with minimal interest rate and costs. All this is possible even if you are self employed, as long as you get a few basics right – steady income, thorough documentation, reasonable contribution from your end and a good history of loan repayment in the past. 

We look forward to hearing from you about your home loan journey. Do share your thoughts, queries and comments with us below.


Suma Ganesh

Suma Ganesh

Suma is an MBA in Finance and Marketing from ICFAI, Bangalore. She worked as an investment advisor to retail and high networth clients for nearly 7 years at Allegro Capital Advisors Pvt Ltd. This gave her a first hand understanding of the needs of an individual customer. With this edge, she moved on to Adi FinShiksha Pvt Ltd, where she trained financial advisors to manage their clients' investments and financial needs. With deep understanding of customers and their advisors, Suma then moved on to writing content in the space of personal finance. she is currently working as part of the content creation team at SwitchME, addressing the needs of home buyers and home loan borrowers.
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