Frequently Asked Questions About (FAQ) Salary Certificate

FAQ-1. How Many Salary Certificates Issued to an Employee

Answer: Normally an employee is entitled to get Salary certificate once in a year. In some organization, it will be given upto 4 in each quarter year gap. It depends the policy of the company / organization, nothing else. Many financial institutions accepts Salary slip instead of Salary Certificate as a supporting document for loan application. In such cases employee can apply for 12 loan applications! This does not mean that employee will get loans from all those institutions.

FAQ-2. What is the Limit of Loan Amount Given to an Employee?

Answer: In most cases, the third or fourth institution could recognize the employee's purchasing power has been reduced to below permissible level or even to zero, hence, repayment may not be carried out. In such cases, loan application will be rejected.

FAQ-3. What is the time period between two salary certificates?

Answer: Normally after three months you can apply for another salary certificate but better try after one year. This depends company's policy.

FAQ-4. Salary Certificate for Another Loan

I already taken a car loan using my salary certificate, now want to apply for a home loan. When I inquire it, am informed that deductions will have car loan EMI so that, my eligibility for home loan is very low. In this condition how I will get maximum home loan amount?

Answer: When you think for a bank loan, consider the following points:

  • How much amount I require for the living expenditure without borrowing from other source.
  • Normally, Banks should know this point because, after taking loans from bank, you should not be starved or become a beggar for your daily activities.
  • Bank always calculate EMI / NMI ratio which should not be greater than a pre-defined value.
  • Nationalized Banks normally take this value between 40 to 60 depending the Net Monthly Income (NMI).
  • If you have higher NMI and has some liabilities, Bank will further deduct that value from NMI.

You change the payment method for car loan as cash payment instead directly deducting from the salary. This way you can hide your car loan liability from the salary certificate and increase the net earnings.

FAQ-5. Wanted to Apply for Home Loan Under the Following Scenario:

My salary is been divided in to two way 50% bank deposit rest 50% by cash, whereas I am holding two loans in my bank one is personal loan & another is two wheeler, I know that bank will not consider my profile for home loan, whereas my husband is working in private firm, his salary is been deposited in bank every month but it does not show as salary credit by the company's name will appear in the statement, will bank consider his profile? Second thing is that I have to submit the salary certificate to the bank how do you suggest me I want to show my cash payment also in that, will bank consider? How should I ask my employer for this is there any format for this?


Case-1: Husband's Salary Certificate for Home Loan

It is considered to be salary as cash payment, deposited in the bank account every month by the beneficiary itself. Get salary certificate from the company with all earnings and deductions if any, then apply for home loan. There seems no issue at all. The property title should be in the name of husband otherwise a co-borrower (wife, or close relative) needs to be joined.

Case-2: Your Salary Certificate

Salary certificate should reflect your total earnings. The amount you receive as cash may not be accountable, means black money which can't be shown in a salary certificate. If you get salary certificate with 100% earnings, there is no issue at all but I doubt your company will issue salary certificate in such a manner since they hesitant to pay you 100% to the bank.

Try this way: Close your personal and two wheeler loan, then apply home loan by both of you through a joint account.

Salary Certificate Format: If your organization doesn't have specific format for employee salary certificate, download one format from this page and use it.

FAQ-6. Home Loan and Salary Certificate for a New Employee:

I've recently changed my job for better salary. I would like to know whether I can apply for a home loan or mortgage as I would like to reconstruct my property as its more than 15years? My second question is whether my current employer will issue me the salary certificate or not?

Answer: If  "recently" means less than 6 months, wait till completion of one year. Nationalized banks normally seeks three years service from present job, but if you can provide two years IT return with progress in the career, they may consider even one year. Other new-gen private commercial banks at-least require one year. If you are in Govt. / Semi Govt. sector, banks will allow further relaxation.

Giving salary certificate before completing one year depending upon company's policy.

FAQ-7. Salary Certificate For Cash Only Receivable

As I want a salary certificate which i receive in cash. At present I am on rent basis having my two kids one is in cs 3rd year and second one in 12th and I want to purchase a Flat have a value of 24 lakhs with registry it will around 28 lakhs on which I want a loan amount of approx. 20 lakhs. Please guide and dictate the same.

Answer: Whether you get cash or check or any other means, what is the harm to get salary certificate from your employer? Apply for a salary certificate without hesitation.