Documentation is an essential step in the home loan process. Before sanctioning the loan, lenders rely on your documents as proof of your creditworthiness. So not having the right documents on time could delay your loan disbursement. Hence, it is always advised to prepare the necessary documents before applying for a home loan.
Here’s a list of required home loan documents you must submit to financial institutions when you apply for a home loan.
Proof of Income
Lenders want to gauge the size of the home loan you can afford. For this, they need to assess your financial situation. Hence, they will ask you to submit the last few months’ salary slips. It will give them an idea of your current earnings.
Along with the salary slip, you will also need to submit form 16, a certificate of TDS deduction by your employer. A certified letter from your employer or an increment letter will further add to your credibility.
If you’re self-employed, you will need to convince the lender of your income stability through a duly attested Balance Sheet and Profit and Loss account of your business or firm. The attestation should be done by a practicing CA.
They will also ask for your business or practice license, registration certificate, and proof of address to complete their documentation requirement.
Another compulsory document for home loans in India is your tax returns. Generally, financial institutions ask for past three years’ returns. Your returns show them the true picture of your financial health.
They want to ensure that your reported earnings on your income proof are consistent with the income shown in your tax returns.
Needless to say, your loan request cannot proceed forward until you provide a valid photo Id. Any one of the following documents will serve as your proof of identity:
- PAN Card
- Aadhaar Card
- Voter’s ID Card
- Driving License
They will also serve as your proof of age and residence.
To check your creditworthiness, lenders often pull out your credit report. In India, the Credit Information Bureau (CIBIL) is trusted as the most authorized credit agency to provide the borrower’s credit history. The report displays your credit score, a three-digit number between 300 to 900.
A score of 750 and above certifies that you have a good credit record. Such a score helps you land the best home loan in India and accelerates the loan approval process.
Your Assets and Bank Statements
As a part of their risk assessment procedure, banks may ask you for your bank statements and other assets detail. This can include your savings, investments, and life insurance.
These documents help lenders evaluate your net worth. After all, they want to ensure you have enough reserve money to pay your EMIs in case of emergencies.
Property documents are another required home loan document you must submit along with your loan application. These documents validate the property’s existence, ownership, sale, and other details.
While the documents vary according to the nature of the property, here are some common ones that you can keep ready:
- Title deeds of the land (In case of home construction)
- Land tax receipt from relevant authorities
- Approved map of the property
- All prior title deeds of the property from the first allotment (In case of home resale)
- A copy of the sale deed or agreement to sell
- Allotment letter
- Receipts of payment made to the developer or the house seller
- A no-objection certificate provided by the builder or security
- A certificate of no encumbrances on the property
Apart from the above documents, here are a few other documents that form part of your loan approval process:
- A passport-size photograph of all the applicants and co-applicants must be affixed to the application form and signed across
- Proof of own contribution
- The details of ongoing loans, if any, in your name or the name of your business (outstanding amount, monthly installment, remaining tenure)
- The last six months’ bank statements to show the repayment of the ongoing loans
- A cheque for processing fee favoring your lender
Now that you know what all documents are required for a home loan ensure to keep them ready before beginning your home loan hunt. It will prevent you from losing out on the best home loan deals in India.