Documents required for a home loan

Documents required for a home loan

Documentation is a critical aspect of availing a home loan and can lead to a delay or even rejection of home loan if not done satisfactorily. Keeping this in mind we have put together a list of essential documents required for a home loan.

Please ensure you review the entire list and keep all the documents updated and handy. This will ensure your home loan application processing is faster and hassle-free. Please note that a bank representative will verify all originals.

Home Loan Documents are collected into two parts:

  1. For home loan sanction – You will need to submit these documents during the application stage.
  2. For home loan disbursement – You will need to submit these documents for disbursement of the sanctioned home loan amount

Let’s see what these documents are.

Documents required for home loan sanction

Home loan application form with photographs

As per regulatory norms, it is mandatory for you to fill, sign and submit a physical loan application form when applying for a home loan. You will also need to provide passport size photographs of each of the applicants and pay the processing fee.

Identity proofs of the borrower(s)

For KYC and identity verification at least two of the following documents must be kept handy.

  • PAN Card (Mandatory if the applicant income is considered for loan eligibility)
  • Voter ID
  • Passport
  • Aadhar Card
  • Driving License
  • Government Employee ID Card with photograph

Address proofs of the borrower(s)

Address proof documents are required to be submitted in addition to the identity proof documents. For e.g., if the passport is submitted for identity proof it will not be considered for address proof. Additionally, address proof documents are to be submitted for current residential address and permanent address, if different from the current residential address.

The following documents can be submitted as address proof:

  • Voter Card
  • Aadhar Card
  • Valid Passport
  • Latest Government Utility bill
  • Rent agreement on stamp Paper
  • Bank Statements reflecting address of borrowers of any commercial nationalized bank

KYC documents for Business Entity

If one of the borrowers on the home loan is a business owner or is a business entity then you will need to provide the following KYC documents for the business entity also.

  • Business PAN Card
  • GST Registration Certificate
  • Partnership Deed (for firms) / Memorandum of Association (MOA) for companies
  • Registration Certificate issued by ROC
  • Export-Import Code Certificate/Factory Registration Certificate
  • Shops & Establishment Certificate
  • Trade License Certificate
  • SSI Registration Certificate

Income proofs of the borrower(s)

It is critical to provide valid income proofs for each of the applicants of the home loan application. The income proofs required will depend on whether the applicant is salaried, a self-employed professional or a business owner.

Salaried:

  • Latest 3 months salary slip (Last 2 years if an annual bonus is to be considered)
  • Last 6 months bank statement of salaried account
  • Last 2 years Form 16 / ITR

Self-Employed Professionals:

  • Certificate of qualification for professionals: CA, Doctors, Lawyers or Architects
  • Last 3 years’ income tax returns, along with computation of income
  • Last 3 years’ P/L account with all schedules and audited balance sheet, wherever applicable.
  • VAT or Service Tax returns or TDS Certificate
  • Bank statement for the last 12 months (Savings account, current account, and O/D account)

Business Owner:

  • Last 3 years’ income tax returns, along with computation of income
  • Last 3 years’ P/L account with all schedules and audited balance sheet, wherever applicable.
  • VAT or Service Tax returns or TDS Certificate
  • Bank statement for the last 12 months (Savings account, current account or an O/D account)

Property documents

It is not necessary for you to identify the property before applying for a home loan. In fact, it is beneficial to apply for a home loan sanction before you identify a property. Doing so will ensure that you have a clear understanding of the quantum of the home loan you can secure, subject to the property valuation.

If you have identified the property that you intend to purchase, you will have to submit the documents related to the property. The property documents needed will depend on the type of property and the bank policies but will primarily consist of the following:

  • Title documents of the property (For all property owners till date)
  • Encumbrance certificate
  • Building plan approval
  • Receipts of building and land tax payments
  • Detailed breakup of cost of property
  • No Objection certificate from builder/society
  • Construction Agreement (if the property is under construction)

This will complete the home loan application and all the required documents submission to the lender. After that the lender will evaluate your credit history, eligibility, creditworthiness, and the property details. If found suitable issue a sanction letter for the amount of home loan they are willing to lend to you.

The sanction letter is extremely important and you must be review it thoroughly. If you are satisfied with the sanction you can proceed to take the loan. The next stage of the loan is disbursement.

Documents required for home loan disbursement

Signed Sanction Letter

All borrowers and even guarantor or Power of Attorney, if applicable, must read and sign the sanction letter provided by the bank and confirm that they agree with all the conditions laid out.

Signed Loan Agreement

All borrowers must also sign the loan agreement which is an exhaustive legal agreement of the terms and conditions under which the bank is providing the home loan. The loan agreement will include several annexures detailing the Most Important Information, List of Documents, Disbursement Request Letter, Guarantor Agreement (if applicable).

Standing Instruction Form and Security Cheques

A standing instruction form must be signed and provided for the account from which the home loan EMI must be debited. Additionally, a cancelled cheque from the same account must also be provided along with the standing instruction form.

Multiple security cheques will also need to be provided to the bank. These will usually include 3 cheques for the EMI amount and 1 blank cheque. All of these security cheques will be without a date and are held by the bank in case of non-payment of EMI or default.

Own Contribution Proofs

You must also provide receipts and bank statement as proof of payment of your contribution towards the property purchase in line with the own contribution agreed.

  • Tax Deducted at Source (TDS)

TDS has to be paid when a disbursement is made from the home loan account. If you have chosen to make the TDS payment yourself you will need to submit the TDS challan and bank statement reflecting TDS debit. If you have asked the bank to deduct TDS then you will need to submit an undertaking for the same.

  • Property documents

If you identified the property after the loan sanction then all the property documents will need to be submitted before any loan amount can be disbursed.

If you have already provided property documents at the time of application the bank will verify if all documents needed for disbursement are in order. If not the bank may request additional documents for the property. As listed above the documents will depend on the type of property and the bank policies but will primarily consist of the following

  • Title documents of the property (For all property owners till date)
  • Encumbrance certificate
  • Building plan approval
  • Receipts of building and land tax payments
  • Detailed breakup of cost of property
  • No Objection certificate from builder/society
  • Construction Agreement (if the property is under construction)

Once you have provided the documents the lender will verify and process the disbursement.

Please note that some documents such as disbursement request, own contribution proof, TDS, etc., may need to be provided multiple times if the disbursement is happening in tranches based on construction progress. The builder and the lender will guide you on the same.

Conclusion

In conclusion, while the list of documents required for getting a home loan seems long, it is helpful to check all the documents required upfront. This will make your loan processing smoother and reduce the time to sanction and disburse your home loan.

If you have any questions about home loan documentation never hesitate to ask your lender. Or reach out to us if you need expert home loan advice. We are happy to help.

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