There was a time when common man could hardly think of buying his house because of lack of easy access to funds, since, it was rather tedious to apply for loans and get an approval within a requisite time frame. Financial Sector development was a very important part of the overall progress that occurred in last few decades. This brought in various positive changes in the way the loan procedures were carried out.In this age of fast life and instant solutions, buying a house has come a long way from being just a dream. All thanks to the much required influx of easy and flexible loan facilities.
What do Home loans mean?
Financial institutions like banks, home financing companies take a mortgage agreement to lend a typical part of the value of the total value of the property under discussion with the property buyer. The property is released, once, the agreed upon amount is re-paid, within the stipulated terms and conditions.
Eligibility for applying for a Home Loan
Most of the home loan providers check the individual for accountability towards the repayment of the loan if sanctioned. In this phase, personal details and credit history is checked for any defaults or issues and clarified before going to the next phase.
After the clearance of legal and technical scrutiny of the property, the next step is to submit the required documents. In general, the documents required to apply for a home loan are common to most of the financial institutions, but may differ in a small degree depending on cases.
It depends on the policies of the loan provider to ask for the documents in originals or copies; however original documents are required for verification purpose in most cases.
Documents Required for Home Loan
1. Duly completed loan application form with the requested number of passport size photographs.
2. Photocopies of identity proofs like passport or driving license, Pan Card. For some institutions, Voters card can also be used.
3. Photocopies of residence proof like electricity bills.
List of documents to be submitted for salaried employees
1. Proof of Income – This includes recent salary statements from the employer. Some institutions ask for the salary slips for last 3 months while some others for 6 months duration, especially when a 3 month document does not adequately represent one’s income. For example, there may be some variable components like incentives which may not be reflected. Latest Form 16 for tax clearance issues if salary is above 10000/- per month.
2. Company profile for which the individual is working, if the company is not known to the home loan provider.
3. Photo copies of documents showing net worth of the applicant.
4. Photo copies of the bank statements, pass books for the recent transactions. Again, this depends on the loan provider in question, but usually it is asked for 6 months.
5. Photo copies of any insurance policies held by the applicant.
6. The documents to be submitted with respect to the property under purchase include the original agreement with the developer, photo copies of the payment receipts and other documents regarding the property that might be asked for, by the home loan provider.
List of documents to be submitted for self-employed professionals/businessmen
1. Other than the above mentioned list of common documents the home loan provider demands certain other documents like, document including a brief note on the type of self employment, Photo copies of educational qualification certificate and professional practice certificate in addition to the below listed documents.
2. In case of businessmen, Photo copies of documents showing all the licenses and registrations which may be required for carrying on the business. Other documents like partnership deed, etc. depending on the nature of business.
3. Photo copies of documents showing all the financial transactions regarding employment like latest profit and loss statements, balance sheets, Bank statements as applicable. Here, again each home loan provider decides the duration for which the documents have to be submitted.
4. Income related documents like total income statements, income tax orders, income tax returns duly attested by a Chartered Accountant, for duration of few years,(in general 3 years) as and when applicable.
5. The documents to be submitted with respect to the property under purchase include the original agreement with the developer, photo copies of the payment receipts and other documents regarding the property that might be asked for, by the home loan provider.
Financial institutions follow their own policies to have full proof documentation, but, all in all, the above lists provide a foundation to the documentation involved in home loan procedures.