This brief article discusses a few issues you need to be aware of if you are a self-employed person who is looking to take a home loan.

Good credit standing

As a self-employed person, you are deemed as a higher risk potential. Unlike an employee, there could be greater income and debt fluctuations since you are the person responsible for the business.

Hence you need to demonstrate a favourable credit history to make up for the cash-flow instability.

Stable business

You need to be in business for at least two years because financing institutions require the latest 2 years of tax bill (Notice of Assessment) for application. If you have only been in business for a year, you can take a loan based on one-year Notice of Assessment and asset-based lending [not applicable to Housing Development Board (HDB) flat]. But still loan approval is case-by-case and not all financiers offer asset-based lending. To find out more about this form of loan, please look at “Property Buyer FAQ: What is Asset Based Lending in Singapore Property Lending?”

In addition, financing institutions base the loan quantum on the income stated in the Notice of Assessment. Therefore, if you have claimed for tax deduction, this will lower the income in your tax bill.


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