25 JUNE, 2021

To avail a home loan with a bank or a lender, you must first meet the set eligibility criteria. Employment status, salary, and the number of years you have been working are among the important aspects that lenders analyse to gauge if you could be a responsible and reliable customer for a home loan. So, when it comes to salaried individuals, especially those having a permanent job, getting a loan approval might be easier due to the stable monthly income. However, in case of contract employees, one may find it a little difficult to get a home loan due to the uncertainty that a contractual job portrays. Though it is not impossible to get a home loan while working on a contract, the lender may consider several aspects. Keep reading to learn the factors that affect home loan applications of a contract-based employee.

  1. First job on a contract-basis
    It may so happen that you graduate and get a contract-based opportunity to work at a firm. Though the salary you are earning is meeting the minimum income requirement that lenders have set for home loans, it may not stand true for you. As you do not have previous work experience and it is your first job, lenders may assess such aspects while considering your application. If your contract were to be terminated, you would be left without any income and thus, there are higher chances of your loan application getting rejected.

  2. Higher work experience
    In case you have been working for a long time in your field of expertise, then lenders would easily consider your application. Factors such as the credibility of your employer, continuity of your work, continuity with the same employer, your income, etc. would play a crucial role. Therefore, having a significant work experience without switching too many jobs can help with getting a home loan approval.

  3. Holding a professional degree
    Holding a professional degree can go a long way in getting a home loan even as a contract-based employee. This is because your qualification proves you are capable of earning a stable income. Therefore, most lenders would consider your home loan application even if it were your first job. Due to your high qualification, you wouldn’t face much trouble in case your contract with the current employer were to expire. Hence, a professional degree helps in gaining credibility to be eligible to get a home loan.

  4. Middle-aged contract-based employee
    Your age is another aspect that banks or lenders will take into account before approving your loan application. Most importantly, if you are in your late 30s or early 40s who is earning as a contract-based employee, the lender shall analyse the reason for failing to secure a permanent job. Even with a good work experience, your age can become a hindrance in getting a home loan in India. Thus, banks may consider your work and credit history for the home loan application.

From the above pointers, you can understand that getting a home loan, as a contract-based employee is possible. But the eligibility criteria for home loan is more rigid compared to the terms set for salaried or self-employed individuals. Thus, it is advised to check with your lender before applying for a home loan in India.

Disclaimer: This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank make no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.

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Disclaimer: This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank make no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.