Keep these in Mind If You Are Looking for a Home Loan as a Self-Employed Person
May 17, 2019 Home Loan
Being self-employed gives you the freedom of doing your work as and when you want. You are your own boss, and the challenges that come with it cannot be overlooked. One most significant challenge in today’s’ time is to get a home loan as a self-employed person. A bank does a background check on every home loan applicant, and the reason most self- employed people do not get their loan approved is that the banks cannot find a strong reason to give them a loan.
We list down the challenges all the self-employed home loan applicants face and how to resolve them:
We list down the challenges all the self-employed home loan applicants face and how to resolve them:
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Bookkeeping
Many independent people run a business that is not registered. That is a red flag for the loan lenders. They need to make sure that the person they are lending loan to, is reliable and will not put their investment in hot waters. Having records of tax filings, income, etc. can be of great help. Banks need to see your spending and saving habits. They can overlook a bad year or two, but they need a solid record. They are aware that business is not always blooming; sometimes it is making profits other times it is not making profits.
Keeping a book for the accounts can be a difficult task. One can hire an assistant who can maintain the records for you.
Keeping a book for the accounts can be a difficult task. One can hire an assistant who can maintain the records for you.
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Tax filings
To make sure about your financials, the banks demand you tax filings of the last two years. Most self-employed people have inconsistent tax filings that can drive the banks or loan lenders do not approve your loan.
It is essential to file your taxes every year for many reasons. Not having the same can cause a problem in the future. Having every document ready can make the entire process of the home loan smooth.
It is essential to file your taxes every year for many reasons. Not having the same can cause a problem in the future. Having every document ready can make the entire process of the home loan smooth.
Banks generally give out the home loan for 80% the cost of the property. The rest 20% needs to be paid by the buyer. Make sure you have ample amount that can help you pay our part of the property purchase. There can be times when paying the monthly EMI could be troublesome. Financial burdens do not come knocking on the door. In such a case, make sure that you have your loan lender in the loop regarding your situation. Do no avoid their calls or emails. It can lead you to in a bad case. If you inform your bank about your financial situation, they may give you some time off where you will not have to pay the interest and can start again when you have a better financial situation again.
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