Unlike salaried people, self-employed do not have a regular payslip. Banks will review your financial stability before approving your housing loan application. As a self-employed person, banks may perceive your income as ‘unpredictable’ when it to comes to committing to the monthly repayments. However, here are 7 non-standard documents you can provide to prove your income and financial health:
1. Business registration
This is an important document to have, even if your business is small or you are a one-person freelancer. Having a registered business boosts your client’s confidence in dealing with you, and it appears more professional too. Furthermore, the date of registration will be considered very important to the bank. 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 sufficient.
3. Financial records of past years’ income, tax return statement, balance sheet
You have a higher chance of getting your housing 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 licenses related to your business
- Label all folders according to the latest dates or assessment year. This will make it easier for you to provide your proof of income when asked by the bank.
4. Income tax statements
A lot of the self-employed or freelancers in Malaysia may not declare their earnings to the Inland Revenue Board of Malaysia (IRBM) or 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.
If you are required to pay income tax, it normally means your annual earning exceeds RM34,000 (after EPF deduction) or you earn income from a business (through gains or business profits). This is the sort of income stability that banks prefer to see.
5. Bank statements
For regular-employed applicants, bank statements serve as proof that they are indeed being paid their salary. For those who are self-employed or are 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 show your steady stream of income, which leads to your accumulated savings. If you aren’t able to show your savings record, it’ll be hard to justify the stability of your business.
7. Credit score report
Banks or 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 two popular credit reports, CCRIS and CTOS to assist their evaluation. A good credit score will make you a more attractive candidate for a loan. With a good credit score, you can even get better home loan interest rates and even quicker loan approval.