Home Loan for Business purpose?

Who is an entrepreneur?

An entrepreneur is someone who puts his ideas into a new business, bearing most of the risks associated with it and enjoying most of its rewards. An entrepreneur has to be innovative enough to survive in the constantly upgrading market standards. Being imaginative isn't the only requisite, as even the generic ideas can play well when executed with accurate premises for development.

What motivates entrepreneurs to make a living out of their unconventional ideas is the fire and urge to "be your boss" and "live on your terms". While the crowds get satiated with an average paying position, entrepreneurs envision growth, both personal and financial, on a grand scale. The feeling of self-accomplishment is something only one can offer to oneself. To be a fruitful entrepreneur, one can never see a standstill. The best entrepreneurs appreciate the journey as much as the destination. They have a thirst for information that helps them in their business and personal growth. That synergy creates a sweet spot that maximizes their impact.

Why avail a home loan for business?

A home loan acts as strong support when it comes to buying a home. So if an entrepreneur has made timely payments on his home loan and wishes to fund his venture, he may reach the concerned bank and apply for the loan. It is known as a loan top up, as the borrower is asking for an amount over the loan he has already taken. That also means there’s no requirement for collateral, and the granting prices would be much easier and less time-consuming. Though the “top-up” process would require a few essential documents, such as:

A set of passport photographs Identity proofs- Aadhar Card/Passport, PAN Card (mandatory)Residence proofs- Ration Card, Electricity bill, Gas bill, Phone bill Office proofs- Phone bill (landline bill), electricity bill, certificate of commencement from the register of companies.

Can an entrepreneur avail a home loan for his business?

Funding is something significant when it comes to executing the idea which an entrepreneur seeks for his vision. While many people start self-funding their new ventures, other people look for government schemes, entrepreneurship-related dictums from lending institutions and angel investors.

Self-employed citizens, like salaried individuals, are eligible to apply for home loans in any agreement, be it an individual or a joint agreement. If an entrepreneur wishes to fund his venture himself, he must be aware that he is eligible to apply for a home loan, over which he can develop the business. The eligibility criteria to apply for a home loan is:

1. The applicant must be an earning citizen with the capacity of paying back the loan amount with interest. To verify the same, banks ask for the entity’s last two years’ financial statements along with the previous three years’ IT returns.

2. The applicant’s age must be a minimum of 18. A parameter that affects the interest rate is that of age. In the case of a home loan, a younger person would have more time to repay the loan amount, which means a comparatively lower interest shall be paid. Whereas in the case of older applicants, a substantial down payment is a prerequisite as it enables them to take the loan.

3. While granting a loan, some lending institutions also consider checking the educational qualification of the borrower.

4. Lending institutions approve loans only to borrowers within a good financial position. Now “good financial position” need not necessarily mean good income with a handsome bank balance but includes the assessment of the borrower’s solid credit position, existing debts, CIBIL score, other loans, etc. Hence it is recommended for prospective borrowers to pay bills and EMIs (Note: the borrower must use the feature of Home Loan EMI Calculator before applying for the loan to get a clear picture of the total finances he is to pay in the future) on time to secure a home loan.

5. When it comes to granting a home loan for business purposes, the bank looks into the income and the ability of the borrower to generate money. The Home Loan Interest Rate is accordingly decided by the bank (as it depends on the tenure of the loan and the down payment made by the borrower).