Can freelancers get a home loan? This is one question countless freelancers like you have asked themselves while looking for their own living space. You can be earning really well, but lenders can be hesitant to give you the green flag with no proof of stable employment. However, it isn’t impossible!
Here are a few tips on how to buy a house as a freelancerwithout difficulty.
1. Get your financial information in order
Before applying for a housing loan, get all your financial information in order first. Having all your documents and information in place will prove that your business is legitimate and profitable.
Start organizing and separating your business and personal expenses. If you don’t have a separate business account, make one immediately. Lenders can then track your deposits and expenditure, which can help you prove a steady income source.
Also, prepare the following documents before you approach a lender.
- Identity proof
- Proof of residence
- Income proof (IT returns, pan card, etc.)
- Financial documents (Latest balance sheet, Audited profit & loss account)
- Property documents
- Other documents (Last 6 months’ payment statements of any pre-existent loans if applicable, CA/CS certified last 6 months of shareholding patterns, MOA for companies, Partnership deed for firms)
Additional Read: What are Some Home Loan Obstacles Self-Employed Face?
2. Get prequalified for a home loan
Prequalification can help you understand how much loan you can afford to take. For a freelancer, this might be beneficial to help you understand whether your multiple sources of income are enough to afford a new home. If you do get prequalified, it will also reflect positively on your chances of getting approved for a loan.
3. Maintain a healthy credit score
Your CIBIL score helps lenders determine your creditworthiness and ability to repay the loan. Having a score of 750 or above will significantly increase your chances of obtaining a home loan. Freelancers like you can also do the following to boost your score:
- Check for errors in your credit report and update immediately, if any.
- Do not open new lines of credit.
- Keep your credit cards open. Closing them will limit your credit history and increase credit utilization.
- Pay off existing debt.
- Keep credit card utilization to a minimum.
4. Tax deductions
You have to give up on a few tax deductions if you’re availing of a home loan for freelancers. This is because tax deductions from your income might make it look like you’re earning less money than you are. This is a red flag for most lending institutions. Giving up on few deductions will boost your taxable income and increase your chances of obtaining a higher loan amount.
Additional Read: 5 Tips to Close Your Home Loan Without Facing Any Complications
To sum up
Obtaining housing finance as a freelancer won’t be too tedious, provided you keep the previously mentioned tips in mind. If you’re a freelancer looking to purchase your own space, Tata Capital has you covered. We offer affordable home loan interest rates starting at just 6.70% for a tenure going up to 30 years.
So, what are you waiting for? Check out our loan eligibility criteria now!