Documentation – The documents submitted by self-employed professionals are distinctly different from those submitted by salaried professionals. While a salaried home loan applicant needs to provide salary slips of last six months as proof of income and work experience certificate for last three years, a self-employed individual has to provide his ITR for the last three years as well as last six months’ bank statements.
Loan Tenure – The approved loan tenure for both salaried and self-employed individuals are different mainly because the salaried applicant has a set source of income up to retirement, but the self-employed can continue working even after the age of retirement. Hence, lenders often keep the upper age limit for self-employed applicants up to 65 years of age.
Processing Fee – Most lending institutions charge a processing fee on all their loan products, whether to salaried professionals or self-employed individuals. The processing fee is non-refundable for all and includes service tax also. While the processing fee is predefined for salaried applicants, lenders ascertain it for self-employed applicants based on their business turnover, business complexity, provided documents and assets, among others.
Rate of Interest – A key aspect of acquiring home loan, rate of interest impacts the decisions of many applicants. Rate of interest vary from lender to lender and are determined as per the loan amount, credit score, savings and loan tenure of an individual. The rates can vary drastically from salaried professionals to startup employees. Since the self-employed are at a greater risk of defaulting because of lack of fixed monthly income, their interest rates are likely to be higher. But in some cases, lenders offer similar interest rates to self-employed just because their business foothold is very strong and prospects are promising enough.