Is it possible to get a home loan without a pay slip??
Source: New Straits Times
It’s impossible to get a home loan without proof of income as your income stability and repayment capability isn’t guaranteed compared to if you’re a civil servant, regular-employed, or salaried person.
Usually, you’d need to submit to ensure a smooth home loan application process.
- One of the most important documents in proving a person’s home loan.
- EPF statements
- A great way to prove the level and stability of your income.
- Bank statements
- Proof that you’re indeed being paid your salary.
- Copy of MyKad
- Required for almost any housing loan application as a Malaysian citizen.
A self-employed person might have problems providing the first two documents on the list above. But, it’s not the end of the world. You can still get a home loan if you fall under the category. Here’s how.
Get to know the non-standard documents freelancers can use for home loan applications!
1. Business registration
This is an important document to have, even if your business is small or you’re a one-person freelancer. Having a registered business boosts your client’s confidence in dealing with you, plus it looks more professional. The date of registration will be considered very important to the bank, as it will justify the sustainability of the business.
2. Business profile
This is important so that banks can identify the nature of your business. Even a simple website or official Facebook, Instagram, or LinkedIn page will be enough.
3. Financial records of past years’ income, tax return statement, balance sheet
You have a higher chance of getting your home loan application approved if you can provide an organised financial record of previous years’ income, tax return, profit and loss statement, and balance sheet.
Here’s a simple checklist of what you can do:
- Make sure that your business is registered with the Companies Commission Of Malaysia/Suruhanjaya Syarikat Malaysia (SSM)
- Keep all statements, documents, and licences related to your business
- Label all folders according to the latest dates or assessment year.
4. Income tax statements
If you’re required to pay income tax, it normally means your annual earning exceeds RM34,000 (after EPF deduction) or you earn income from a business. Your banks will look at this proof of income stability.
A lot of the self-employed or freelancers in Malaysia may not declare their earnings to the Inland Revenue Board of Malaysia (LHDN). However, having the last three years of your income tax statements on record goes a long way in helping you get your home loan approved.
5. Bank statements
For regular-employed applicants, bank statements serve as proof you have salary coming in. For the self-employed or freelancers in Malaysia, bank statements show that actual business income and profit are generated.
From the banks’ perspective, savings are the best way to justify and that you have a steady stream of income, that leads to accumulated savings. If you aren’t able to show your savings record, it’ll be hard to justify the stability of your business, and you’ll probably see the “REJECTED” chop on your loan application.
7. Credit score report
Financial institutions in Malaysia have their method of evaluating your credit score. As credit score indicates a consumer’s credit risk, banks will refer to CCRIS and CTOS to assist their evaluation. A good credit score will make you a more attractive candidate for a loan, giving better home loan interest rates and even quicker loan approval.
We’ll also throw in some extra tips to help you get a home loan
You can get yourself a guarantor if you are worried that your employment status carries risk when applying for a home loan. It can be anyone, your family members, relatives, and even close friends.
We also found out that there are also banks that actually lend to the self-employed! CIMB, Bank Rakyat and HSBC are a few that offer home financing for such applicants.
By the way, the gomen is also on your side.They’ve allocated RM2 billion under the Housing Credit Guarantee Scheme (HCGC) in the recent Budget 2022, which aims to ease the home loan application for the self-employed and the underserved, accelerating the housing market along with it.
Did you know that you had other alternatives to get your home loan approved? Share your thoughts with us!
Real Property Gains Tax (RPGT) in Malaysia (2022)
Here’s How You Can Make a Profit From Subletting
Ask These 6 Questions To Find the Right Real Estate Agent