A properly organised set of documentation makes lenders look upon your home loan application favourably. It facilitates smoother loan processing and quick disbursal of sanctioned funds. Home loan documents figure prominently in the list of key parameters that lenders are mandated to appraise before they acquiesce to your credit request.
Since housing finance involves large sums of money, an application is only approved after a thorough review process to gauge the borrower’s eligibility, repayment potential and property specifics.
Therefore, make sure that you include all the necessary paperwork with your application. If you don’t, your request may be denied, which could negatively impact your credit score, and make it more difficult for you to avail of any future credit. Documentation is integral to loan approval and one must know the correct order of paperwork to ace the application process.
Home Loan Documents – an Essential Checklist
Both self-employed and salaried individuals, who wish to obtain a home loan need to provide a number of supporting paperwork to validate their application. Lender requirements could widely differ, but in general, you will need to furnish proof of your identity, proof of address, evidence of income, bank statements and documents pertaining to your property.
Thus, it is essential to enquire about a comprehensive list of necessary documents from your selected lender so that you may keep them at hand for timely submission, as and when called for.
The basic list of documentation that applicants must provide to avail a housing loan is mentioned below:
KYC Records
- Passport-size photo
- Mandatory documents- PAN card or Form 60
- Identity proof – Voter ID card, Aadhar card, passport, PAN card or driver’s license
- Proof of residency – Electricity bill, phone bill, ration card, bank passbook, employment letter or bank statement with your address on them
- Proof of age – Passport, PAN card, birth certificate, bank passbook, driver’s license or 10th grade report card
Evidence of Income
Lending institutions will determine a loan applicant’s eligibility and ability to repay the loan by closely reviewing his/her income and credit history. For this reason, banks require documents that indicate stability in your monthly earnings. These may include:
- Recent salary slips for the last three months
- Income tax returns (ITR) filed for the previous two years
- Bank account statements for the previous six months
- Form 16 (Part A and Part B)
- Employee identity card
- Letter of appointment, employer certificate or increment letter (as applicable)
Property Documents
Your home loan is a secured type of credit that is centred around a high-value real estate asset. The property may be repossessed by your lender to recoup bad debts in the event of a loan default. Before accepting an application, banks and other financial organisations will scrutinise the concerned property and related paperwork to assess its current market valuation. This also helps in establishing the precise loan amount they could offer you.
Lenders will need the following property documents for carrying out legal verification and technical checks on the house:
- Certificate of commencement
- Registered sale agreement
- Copy of approved building plans
- Payment receipts made to the builder
- Registration receipt
- Sanction letter
- Prior owner’s chain contract
- Occupancy certificate
- Society maintenance bill
- Electricity bill copy
- Possession/allotment letter
- Society NOC (No Objection Certificate)
- Property insurance papers
- Society share certificate
- Society registration certificate
It must be duly noted that the paperwork you present for a house loan must be up to date with the most recent and accurate information.
Summing Up
The process of getting a budget-friendly home loan is challenging and requires careful consideration of a multitude of facets such as interest rates, eligibility compliance, financial stability, repayment options and so on. Among these, your eligibility is the leading aspect that lenders will examine in great detail. Hence, make sure that you maintain a good CIBIL score and possess impeccable credit habits.
If your credit score is not up to the mark, there are several effective ways to increase your CIBIL score. In this regard, you must always pay your bills and EMIs on time. Refrain from missing payments or taking on excessive debt. Also, watch out for any inaccuracies or errors in your credit report and take immediate action to rectify them. It may take up to a year before you notice any improvement in your CIBIL score, so be patient and consistent in your credit dealings. Once your score touches the preferred credit score range, you can then confidently approach your lender for a housing loan and expect attractive terms and conditions.