Applying for a home loan may seem like a Herculean task, but it need not be so.
We list six easy steps on how to go about applying for a home loan.
Step 1: Submission of loan application
The first step involves filling up the application form of the housing finance company (or bank) along with the required documents. A one-time processing fee will also have to be paid at this stage.
Income documents needed:
If you are employed
- Verification of employment form.
- Latest salary slip/salary certificate showing all deductions for at least the past six months.
- Form 16 from your employer for the past three years.
- If your job is transferable, permanent address needs to be provided.
- If you have been in your present employment / business or profession for less than a year, mention details of occupation for previous five years, giving position held, reasons for change and period of the same.
If you are self-employed
- Balance sheet and profit and loss account of the business/profession along with copies of individual income tax returns for the past three years as certified by a chartered accountant.
- A note giving information on the nature of the business/profession, year of establishment, present bankers, form of organisation, clients, suppliers, et cetera.
- Your net worth as an applicant/co-applicant.
Step 2: Submission of property documents
- Title deeds of the builder/land owner for a period of at least 13 years.
- Development agreement between the builder and land owner if applicable.
- Power of Attorney executed in favour of the builder, if applicable.
- An encumbrance certificate for the past 13 years. An encumbrance certificate is report issued by registrar of assurances or sub-registrar's office after due verification of the relevant documents certifying that the property in question is free from all encumbrances such as mortgages, leases, easements or restrictions.
- A khata certificate. This certificate is the basic document indicating ownership of property as entered in the register of the government authorities.
- Up-to-date tax paid receipts of the property.
- A sanctioned plan and licence.
Step 3: At the housing finance company branch
- An agreement for sale and a construction agreement with the borrower.
- A comprehensive legal scrutiny will be done.
- Pre-sanction inspection of the property will be carried out.
- Credit appraisal and personal interview.
- Following this, a sanction letter will be issued.
- Acceptance of sanction letter. Administrative fee to be paid at this juncture.
Step 4: Final documentation for the loan
- Tripartite agreement between the borrower, builder and the housing finance company to be submitted.
- Proof of investment of margin money to be submitted.
- Loan papers to be signed by the applicants.
- Your guarantors should execute the guarantee agreements.
- The original documents executed with the builder to be submitted.
Step 5: Disbursement of the loan
- Inspection of the property will be carried out to ensure progress of work done.
- Following this, there will be a release of loan amount directly to the builder to coincide with the progress of work done as per the agreement with the builder.
- No objection certificate from the builder to mortgage the property in favour of the housing finance company to be obtained.
- No objection certificate to be obtained from other housing finance companies if the builder has availed a project loan, to release the mortgage right over the flat to be financed by the company you are securing the loan from.
Step 6: After release of the loan amount
- Receipt to be obtained from the builder for the amount released.
- The sale deed, duly registered, must be obtained.
- In addition to this, an up-to-date tax paid receipt would be sought.
- An encumbrance certificate will be deemed necessary.