Being a self-employed individual has its perks and challenges. While you have the luxury to be your own boss and make your own decisions, there are areas where you might face some obstacles. One of them is when applying for a home loan.
What housing loan challenges do the self-employed face?
If you are a freelancer or an entrepreneur, getting a housing loan without a steady paycheque might not be a straightforward process.
Since most lenders are not risk-takers, they view your income as more volatile than someone who works 9 to 5. This is why you’re required to demonstrate a stable income to get your application approved. You’ll need to work harder to prove your repayment capacity and qualify for the loan. But lucky for you, there are many ways to achieve this.
Here are some actionable steps you can take to boost your home loan eligibility.
How to improve your home loan eligibility
#1 Improve your CIBIL score and credit history
The first thing a lender will check while assessing your application is your CIBIL score. After all, it is a snapshot of your financial habits and highlights your creditworthiness.
That’s why you should always maintain a high credit score. Preferably of 750 or above, to ensure your borrowing journey remains free of bumps. Paying your credit card dues on time is the easiest way to get there.
#2 Clear off pending debts
While reviewing your loan application, lenders will also consider your debt-to-income (DTI) ratio. It is a ratio of your monthly debt payments and income. They use it to evaluate your repayment capacity. Thus, if possible, it is best to clear all your pending debts before you apply for a home loan. This will help to reduce your financial burden and boost your eligibility.
Additional Read: How to Apply for a Home Loan If You Are a Self-Employed Individual
#3 Craft a sound business plan
Since you don’t have a regular salary, a well-thought-out business plan can boost your eligibility when applying for a home loan online. You can easily convince the lender of your repayment capacity by showing healthy cash flow cycles and budget expenses.
So, chalk out a detailed business plan depicting positive records and turnover. This will ensure the lender that you are a worthy candidate.
#4 Pick the right lender
Lastly, opt for the right lending institution to increase your chances of getting approved. That’s because some lenders may use strict criteria to assess self-employed borrowers like yourself.
So, pick a lender who provides easy eligibility terms along with attractive interest rates. Shop around, speak to experts, and compare different lenders. With due diligence, you can narrow down to a suitable lender in no time.
Additional Read: 6 Steps for a Self-Employed Professional to Get Your Home Loan Approved Instantly
Over to you
If you are struggling to get a loan as a self-employed professional, let Tata Capital come to your aid. With our flexible eligibility criteria and competitive home loan interest rates, you purchase the house of your dreams in no time.
So, visit our website without delay and apply for our custom housing loans today!