Unless you have a real estate of great value, you must always prove your income with classic loans. This is also due to several new legal provisions under which the lender is obliged to check whether his client is able to repay the money without any problems. And just the regular income and its amount is the indicator that is viewed most. What can be imagined under such a regular income? What else do banking and non-banking providers accept and what not? Let’s look at it together.
1) Classical employment
Most providers prefer to use this. They are sure that they need a working-age person who, of course, has a job. He is employed on a normal contract of employment, resulting in not only salary but also various security. This regular income can be further divided into two categories:
The case of employees who have been working with the employer for a long time and because their employer is satisfied with them, has committed them in the long term. A fixed-term contract gives employees certainty that the employer cannot just throw them out – that is, without any compensation. For a lender, a person employed for an indefinite period is the least risky applicant. The job can be lost only:
- If they break the rules of employment
- If the condition decreases
- If she leaves herself
Here the risk is already greater. This contract also generates regular income, but only until a certain date. After that, it is not sure what to do next. There may be an extension, an indefinite transition as well as ejection. Similar situations occur when the employee is only in the probationary period. It has a regular income, but not guaranteed for the entire repayment period.
These can also be classified as regular income. Many people have a summer job, but that’s definitely not the case. There are many people who are employed to work or to work. Why? Because it pays them, the employer pays off. Thus, from this contract and from this work, there may be a regular income that is fully accepted by lenders. In many cases, the contract itself also plays a role. If it is long-term, it indicates the amount of work and the amount of remuneration, the applicant is thus associated with a relatively low risk.
Not everyone must necessarily work for someone. There are people who work only on themselves. They are called businessmen. Their profit is also taken as a regular income. Of course, how long the person has been doing business also plays a role. The longer the better for her. Most often, the amount of income is proven on the basis of tax returns. The more retrospectively they are, and the more they show that the income tends to rise, the lower the risk of the client. Therefore, it can often look forward to low interest. Sometimes, in addition to tax returns, other documents are required, such as:
- Issued invoices
- Account statements
- Confirmation of debt
Why? This is mainly because the tax return always relates to the previous year. On the basis of these additional documents, the lender only wants to verify that the entrepreneur has sufficient regular income even when applying for money.
For lenders, this is a regular income that is much more secure than it is for an employment contract, agreement, or business. This is because there is virtually no situation in which the pension would cease to be paid – except for the exceptions that we will look specifically at. The only risk here may be the amount of pension. From this, the approval or non-approval of the loan is derived, of course, taking into account the current costs. In any case, any pension is a regular income. And what are the types?
The type of pension that is associated with the specific health problem of the person receiving it. The amount varies according to the degree of disability of the person. It is this type of pension that is most risky because the reviewer can change the qualification of the health problem and the amount of money received can decrease as a result of changing the category.
Widow’s, widower’s and orphan’s pension
It is given to a person who is left alone. In terms of the amount, this is a constant income at the same rate, which gives credit providers certainty. But there are also risks. This situation may not be permanent, which may result in the pension being withdrawn in the future.
A regular income that is most secure for both the recipient and the lender. Not only is it not expected to decrease – on the contrary, it is regularly added to pensioners, but it can not be expected that it would be taken away from someone. This can increase the security of obtaining a loan. On the other hand, it is received by persons from a certain age, which is a risky situation for the provider, especially for long-term loans. Often the age, the amount of pension or the possibility of a possible guarantor decide.
5) Social benefits
There are many types of benefits that are seen as regular income, the risk being that they are paid rather in the short term, in months or years. The security of long-term disbursement is quite low. But it always depends mainly on the type of social benefit. The best known are:
- Maternity assistance
- Parental allowance
- Unemployment compensation
- Child allowances
It can result from equity, investment, insurance, rental properties, but also other things. A person known as a rentier is treated as a regular income person. The main role is played by the type of income and the level of security whether it will be paid in the future. Which may not be 100% for various investments.