Is It Possible to Get a Home Loan With Future Rental Income

Dev Singhraha

Relocation Expert

For salaried employees, it is easier to get the home loan approved and buying the dream house. However, the same is not the case for self-employed and businesspeople. To make sure the loan they lend to the self-employed borrowers, is returned, the banks adopt stricter measures. The loan tenure is shorter, and the interest is higher for them.

People in business and property owners looking to get a home loan against the future rental income may find themselves in a similar situation. We discuss everything that a landlord might have to know regarding the home loan eligibility.

Are you eligible for the loan?

Having a rental income is an excellent way to apply for a home loan against it. The banks will, however, do a rigorous background and financial check to make sure you are the right candidate to approve the home loan.

For the applicants who are applying for the home loan against the rental income, the banks charge 1 percent as processing fee. For salaried employees, the fee is waivered. The home loan rates are higher; generally, between 10 to 13 percent, and the loan tenure is up to 10 years. If the property is a lease, the home loan tenure will not exceed the lease period.

If you are planning to get a loan, keeping in mind the future rent generating capacity, then one should remember that the banks will not approve the loan in this case. However, the senior citizens who are earning a pension can avail the home loan in this case.

Background checks that the bank initiates:
To approve the loan against the rental income, the banks first investigate the rental income and the consistency of the same. The banks begin a technical and legal inspection of the property to establish the future potential of the property. Since the repayments depend on the rental income of the property, the banks have to make sure that the property is in good condition and can generate the income for the loan tenure period. The banks will also use the property as the security against the loan.

Make your loan application stronger:
If you want to make sure that the loan gets approved by the bank, applying for the loan jointly with the co-applicant who earns a stable income every month is a good idea. It will assure the banks that even though the property fails to generate the income, the loan can be paid by the co-applicant.

The banks are also willing to give out the loan if you pay a considerable part of the property value, 40 percent, upfront. The loan borrower must have a good credit history and a good repayment record. This will give the banks a good idea about your repayment habits.

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