Words Abdul Rahman
The real estate sector is booming because of the readily available housing loans. New-age lenders now use advanced technologies in their credit appraisal systems. When you provide your information and upload papers, their software quickly tells them of the risk connected with you being authorised for the loan. Now the question is, what documents will you need to make the distribution procedure go smoothly? Let us understand.
Documents Required for a Home Loan
1. Age Proof
Age is an essential factor in determining whether or not a person is eligible for money. Most lenders have set minimum and maximum age limits of 21 and 65 years, respectively. However, if you do not have any income, you will be approved if you include a co-applicant on your loan application, even if you are 18 years old.
Here is the list of documents required for a home loan serving as age proof:
- Passport
- Driving license
- Birth certificate
- Bank passbook
- Class 10th mark sheet
- PAN card
2. Income Proof
The higher your monthly earnings, the better your chances of receiving a loan approval. However, having a decent income is not the only criterion for loan acceptance; income credit in your bank account must also be consistent.
For example, suppose you are a business owner with an annual income of Rs 20 lakh. However, in terms of consistency, you earned in nine of the twelve months while generating zero sales in the other three. In such a case, the lender will reject your application.
Here are some income-related papers required when you apply for a home loan:
- Bank account statements from the last few months. If you are a salaried employee, attach the statement for the account to which your salary is credited. You must submit your company’s current account statement if you own a business.
- Income tax returns over the past 1-2 years. This document shows your earnings and any investments you made in the financial year. It specifies the deductions you took for contributing to schemes qualifying for tax benefits under Section 80C. You may also be asked to produce 26AS, which reflects the TDS from your various income sources.
- As a business owner, you may also be required to submit GST returns for the last several months.
- Form 16: Your company issues this certificate when they deduct taxes from your salary.
- Salary slips or certificates bearing your employer’s signature and stamp. Make sure this paperwork includes your name, designation, and date of joining.
- Cash flow statement, income statement, and audited balance sheet for business owners
3. Employment Continuity Proof
Lenders favour those with relevant experience in their job or business. Typically, loan approval requires 1-2 years of consistent work experience.
If you change jobs every few months, you may encounter rejection. Every new job includes a 3-6 month probation term. Your performance will determine if you are retained by the employer beyond the probation period. To avoid this uncertainty, stability is essential in the eyes of the lender.
Here are the main documents needed for this purpose:
For salaried employees:
- Appointment letter
- Relieving letter
- Letter of Promotion
For self-employed:
- Business registration certificate
- Shop and Establishment Certificate
- GST registration certificate
- VAT and service tax registration
4. Relationship proof
As previously stated, if you do not match the lender’s minimal qualifying criterion, you may be required to add a co-applicant. Most lenders favour co-applicants that have a direct relationship with the primary borrower. That implies you can only include your spouse, son or daughter, unmarried siblings, or parents as co-applicants.
To prove your link, the documents required for a home loan here are:
- Aadhar card
- Valid Passport
- Voter ID card
- Driving license by the RTO
- Marriage certificate
5. Property Related Documents
The house property you wish to purchase should be free from any dispute. It must also not serve as collateral for any mortgage loan.
Here are some property-related papers required when applying for this loan:
- Sale agreement. This document must specify the names of the parties involved in the sale transaction, the location and other detailed description of the property, the payment schedule (if any), construction timelines, the signatures of all the witnesses, and a penalty clause (if any of the parties default in fulfilling their obligations).
- Sale Deed. Check if the buyer and seller’s names, along with their age and address, are accurate. Confirm the property description, such as area and size.
- Khata certificate: This document suggests your property is registered in the municipality’s records for the concerned area. It also specifies that the construction is as per the approved construction plan.
- Property map copy
- Allotment letter issued by the Builder
- No objection certificate (if the property you intend to purchase has multiple ownership)
- Encumbrance Certificate
Conclusion
Securing a home loan requires thorough documentation to prove eligibility and property legitimacy. Essential documents include age and income proof, employment continuity evidence, relationship verification, and property-related papers like sale agreements and deeds. These documents ensure a smooth loan approval process, enabling individuals to realise their dream of homeownership in the prospering real estate market.
