Borrow with margin of safety, EMIs shouldn't exceed 35% of net income

Self-employed borrowers' EMIs should not exceed 35 per cent of their net income and they should also create a contingency fund to deal with income volatility

Self-employed borrowers have been borrowing more from housing finance companies (HFCs) in recent times due to convenience. But loans to this segment have also been going bad at a faster clip. While the self-employed should take advantage of lenders’ willingness to give them housing loans, they should also take precautions to ensure that they don’t over-leverage and default. 

More loans, higher defaults: According to Crisil, loans from HFCs to self-employed borrowers have increased to around 30 per cent of their overall home loan portfolio, up from 20 per cent four years ago. Loans to this segment have grown at an