March 2018

 

The documentation process for home loans can be harrowing for many applicants. The voluminous paperwork can sometimes be very puzzling, thanks to the multiple caveats built into these documents.

It helps you understand why the bank/home loan corporation seeks these papers from you and the purpose they serve.

Credits : freepik.com

I am highly credible. Why then do I have to furnish so many documents?

Home loan processing is a detailed exercise that requires a careful review of many documents. The basic idea is to understand you and your financial standing to ascertain how good a business decision, or otherwise, it is to lend you money for a long term. A good credit score does not mean you can escape the paperwork.

To a very large extent, however, it is in the borrower's hands to be sure of analysing the need and presenting each document for smooth and quick processing of the home loan. It is crucial for the customer to be well versed and aware of the bank's processes and procedures.

My friends and family have filled out home loan applications earlier. Why do I have to give more/different documents?

There are several documents required to apply for a home loan, and these depend on certain key factors.

Your profession

Applicants come from a wide variety of professions and the requirement for one profession could be different from others. There are five main categories of under which the professions are classified:

- Salaried employees: Designers, managers, teachers, public servants on payroll, Navy personnel, etc.
- Self-employed professionals: Traders, businessmen, etc.
- Self-employed non-professionals: Doctors, consultants, freelancers, etc.
- Pensioners: Defense personnel (those who retire before attaining the age of superannuation)
- Exceptional parties: Association of persons, Hindu undivided family, trusts, etc.

Type of Loan

Even within the broad housing loan, there are several sub-classifications on the basis of the purpose of the loan sought for. And, the processes for each are different. The types of home loan are:

- Loan for purchase from developer
- Loan under resale
- Loan for construction
- Loan for plot
- Loan against property
- Loan against rent receivables
- Loan for renovation of existing house
- Loan for balance transfer (from other bank)

Past repayment record

A borrower with a clean past record and a good Cibil score requires to submit fewer documents than the one who has a lower Cibil score (say less than 700). The past records are judged on the basis of the following criteria:

- Standard asset or loan: The payment is made within 30 days
- Special mentioned account: The payment is delayed and the account moves from the bucket of 30 to 60 days and finally to the bucket of 90 days.
- Sub-standard asset: Payments are made after 90 days.
- Doubtful: Payment has not been made for 12 months
- Loss asset: The loan has been identified as uncollectible

Is there a standard home loan document checklist based on specific professions?

Yes, here are a few example of specific professions and needs:

A teacher seeking a loan for purchase from a developer

- Loan application form completely filled and duly self-attested
- KYC documents (PAN, driving licence, passport, voters' ID, etc)
- Proof of income (pay slip for last three months)
- Form 16 (for two years)
- Bank statement (for past six months)
- Income-tax returns (last two years)
- Repayment track of running loans
- Supporting documents in case of sub-standard assets (i.e. running loans)
- Registration copy of the builder purchase property
- No documents required for legal and technical valuation
- Processing fee cheque

A designer seeking loan for resale property

- Loan application form completely filled and duly self-attested
- KYC documents (PAN, driving licence, passport, voters' ID, etc)
- Proof of income (pay slip for last three months)
- Form 16 (for two years)
- Bank statement (for past six months)
- Income-tax returns (last two years)
- Repayment track of running loans
- Supporting documents in case of sub-standard assets (i.e. running loans)
- Documents for legal and technical valuation (Chain of title deeds, sale deed, original papers of property, no-objection certificates, agreement to sell, copy of approved plan, no encumbrance certificate)
- Processing fee cheque

A trader seeking loan against property

- Loan application form completely filled and duly self-attested
- KYC documents (PAN, driving licence, passport, voters' ID, etc)
- Income-tax returns with computation of income (for last two years)
- Profit & loss account and balance sheet audited by a chartered accountant
- Bank account statement (both savings and current) for last two years
- Repayment track of running loans
- Supporting documents in case of sub-standard assets
- All original property documents
- Processing fee cheque

A doctor seeking balance transfer

- Loan application form completely filled and duly self-attested
- KYC documents (PAN, driving licence, passport, voters' ID, etc)
- Bank statement (for last two years)
- Certificate of profession
- Proof of business existence
- Copy of shop/establishment licence
- Income-tax returns with computation of income (last two years)
- Profit & loss account and balance sheet audited by a chartered accountant (for last two years)
- Processing fee cheque
- Letter of outstanding amount of loan with the previous bank
- Repayment track of the loan with the previous bank
- Sanction letter of the loan with the previous bank

Also read: Benefits of Taking a Joint Home Loan

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Source: makaan.com