With the economy on a recovery path from the losses suffered because of lockdowns caused by Covid-19, people’s interest in home buying has increased significantly. A major reason for this increasing interest has to do with the availability of lower home loan interest rates, too. With the intention of providing support to the economy, the repo rate has been kept at a lower level, resulting in lower interest rates on which lending from financial institutions is possible. If you intend to buy or construct a home, this can be a suitable time to look for a home loan at a reduced interest rate. Before you apply for the home loan, it is beneficial to have all the required documents ready. The collection of the documents required for home loan can be a tedious task. Lenders need you to submit different kinds of documents to establish sufficient ground for sanctioning a home loan.
Key Documents Required for Home Loan
Lenders require documents to process loan applications. Different banks may have different rules with regards to the documents required for home loan. However, there are some basic documents asked by almost all the banks. These key documents are listed below:
- Home loan application form: An application form with all the required details carefully filled in.
- Identity proof documents: For the identity proof, you can use documents, such as PAN card, driving license, voter ID card, and so on.
- Residence proof document: To furnish proof of your residence, documents, such as Aadhar card, electricity bill, passbook issued by government banks, driving license, passport, telephone bill and so on can be used.
- Passport size photographs.
- Age proof document: The age of the applicant has a substantial role to play in the home loan process. For age proof, one can use a birth certificate, PAN card, the mark sheet of 10th class, driving license, and so on.
- Salary proof: Salaried individuals applying for a home loan are required to provide different documents to the lender so that the lender can establish the gross or take-home salary or income proof. For this, as a salaried individual, documents like income tax return/Form 16 of last three years, letter from the employer, salary slip of last six months, bank account statement of last six months need to be submitted.
- Income proof for self-employed persons and businessmen: Valid income proofs for businessmen and self-employed persons include IT returns of the last three years, advance income tax payment challans, last six months’ bank statement of business, CA-certified balance sheet statement, etc.
- Business address proof: People who run businesses need to submit a shop certificate, PAN card of business/company, GST registration certificate, etc. as proof of business.
- Details of property: lenders ask for documents for property proof. The prospective borrower needs to submit a no objection certificate from the society or builder. Additional documents include documents estimating the cost of construction, original allotment letter, registered sale deed, receipts of payment if advance payment has been made, building plan, possession certificate, and possession/occupancy certificate.
After sorting out the key documents for the housing loan, the application for the home loan process can be taken forward easily. You can start your home loan application online as well. Typically, lenders start contacting you immediately after you show interest in a home loan. Also, you can check your home loan eligibility online. With the help of home loan calculators available online, you can also check the home loan amount they are eligible for. For exact information and eligibility, it is always recommended that you visit the nearest branch of home loan financers.
Home Loan Sanction Process
- The process of home loan starts with submitting the application to the lender. The application form requires the applicant to fill up the basic details, such as residence address, age, income, etc.
- Along with the application form, documents required for home loan must also be attached. List of important documents for housing loan is mentioned above.
- After receiving documents required for home loan from applicants, lending institutes carefully verify all the documents. Banks or their representatives may contact you several times in this process of document verification. Your employer may also be contacted to verify your declared work organisation. Based on the submission of documents required for home, lenders evaluate the eligibility of the applicant for home loan.
- Eligible applicants qualify to receive the home loan subject to the further checks performed by the lenders. At this stage, they issue a home loan sanction letter. This letter carries information about the sanctioned loan amount and interest rate. Further, the sanction letter also reveals the repayment tenor of the loan and whether the loan has been sanctioned on a floating interest rate or a fixed interest rate. As the borrower, you can also find information about different terms and conditions related to the home loan.
- Borrowers are required to pay a secure fee to the lender after receiving the sanction letter. Depending on the lender, the timing of this may differ.
- Property site can be inspected by the lender, for which bank representatives may visit the property site.
- After the completion of the above process, the final loan agreement is prepared. The loan agreement carries all the terms and conditions and finally the loan amount is disbursed.