Homeownership is a dream that most people aspire to, but not everyone can afford it without borrowing a housing loan from a bank or other financial institution. When you decide to apply for a home loan, there are a few essential documents that are required to initiate and complete the process.
In this article, we will discuss the essential home loan documents that one must keep in mind while applying for a home loan.
1. Identity and Address Proof
The first document that you will need to provide while applying for a home loan is your identification and address proof. This document is required to verify that you are a citizen of India and that you reside at the given address.
ID proof: The most commonly accepted ID proof is a valid passport, voter ID, driving license, PAN card or Aadhaar card.
Address proof: You can provide any of the following documents as address proof: electricity bill, water bill, telephone bill, bank statement, passport, or any other document that carries your address.
Ensure that the address mentioned in your proof of address is the same as the one you have mentioned in your loan application form.
2. Proof of Income
The second essential document that you need to provide while applying for a home loan is your proof of income. The loan provider will scrutinize your income to decide the creditworthiness and repayment capacity of the loan applicant to ensure that you are capable of repaying the loan.
To prove your income, you will need to provide any of the following documents:
– Salary slips for the last six months
– Income tax returns for the last three years
– Bank statements reflecting salary credits for the last six months
– Form 16 issued by the employer
3. Property Documents
Along with the above-mentioned documents, you also need to provide the property documents for which you are applying for the loan. The lender will verify the documents to ensure that the property is free from any legal disputes and has no litigation pending against it.
Some of the crucial property documents that you need to submit are:
– Title deed: It is a legal document that shows the ownership of the property, and it should be in the name of the loan applicant
– Sales agreement
– Property tax receipts
– Approved plan by the local governing body
– NOC from the local society
It is advisable to get your property documents verified by a property lawyer before submitting them to the lender.
4. Bank Statement
Apart from providing proof of income, the lender will also ask for your bank statements for the last six months. The bank statement will reflect your monthly income, expenses, and savings, which determine your affordability to repay the home loan.
Ensure you don’t have any bounced cheques or overdrafts in your bank account, as it will negatively affect your loan eligibility.
5. Loan Application Form
The loan application form is an official document that a borrower completes to apply for a home loan. The lender will need you to fill this form with your personal and financial details. It is essential to fill it with accurate and reliable information, ensuring there are no gaps or errors to expedite the home loan process.
6. Loan Sanction Letter
Once the lender approves your home loan application, they will issue a sanction letter, which specifies the terms and conditions of the loan. It will mention the loan amount sanctioned, tenure, interest rate, EMI, and other loan-related information.
Ensure you read the sanction letter thoroughly before signing it. In case of any doubts, clear them with the loan officer before you sign the sanction letter.
7. Loan Agreement
Once you accept the loan’s terms and conditions mentioned in the sanction letter, the lender will ask you to sign a loan agreement. The loan agreement is a legally binding document that defines the terms and conditions between the lender and the borrower.
Ensure you read and understand all the clauses mentioned in the loan agreement before signing it.
8. Disbursement Documents
After completing the loan agreement’s legal formalities, the lender will initiate the home loan disbursement process. During the disbursement, you will need to provide some documents like:
– Original property documents
– NOC from the builder or seller
– Post-dated cheques or ECS mandate for loan EMI repayment
It is essential to check the loan amount disbursed and the interest rate before you agree to sign the loan disbursement documents.
Housing Loan EMI Calculator
The home loan EMI calculator is an online tool available on many bank websites. It helps you calculate your EMI (Equated Monthly Installment) based on the loan amount, tenure, and interest rate. This tool helps to ascertain the monthly EMI you need to pay for your home loan.
This tool helps you plan your finances better by allowing you to adjust the loan tenure, EMI, interest rate, and loan amount. It provides you the flexibility of experimenting with different loan amounts, tenures, and interest rates before finalizing the home loan.
Home Loan Process
The home loan process is the series of steps that a borrower needs to follow while applying for a home loan. The process is simple, and the lender will guide you throughout the process. Below mentioned are the steps involved in the home loan process:
Step 1: Identify your loan eligibility and apply for a pre-approval
Step 2: Choose the property you want to purchase
Step 3: Submit the loan application form with all the necessary documents
Step 4: Get the property documents verified
Step 5: Await the loan sanction letter from the lender
Step 6: Sign the loan agreement and register the property under your name
Step 7: Loan disbursement and commencement of EMI payments
Conclusion
In conclusion, applying for a home loan can be a daunting task for the first-time borrower. However, if you keep yourself well-informed and provide all the essential documents in time, the process can be smooth and hassle-free.
Do your research on different home loan options, lenders, and interest rates before finalizing the one that suits you the best. Ensure you choose the right EMI amount and an appropriate loan tenure to avoid financial stress. Lastly, maintain a healthy credit score to ensure higher loan eligibility.
