Buying or owning your own home is one of the most important milestones in life, but for many people it is a difficult task because they need financial assistance in the form of a home loan.
It does not matter that individuals are salaried professionals, self employed persons, freelancers; they all may require financial assistance for purchasing a home, and they all can apply for a home loan, which requires some specific documents. Having the information about the Documents Required For Home Loan can make the entire process smoother, faster, and easier.
Why Documents Necessary For Home Loan
All financial institutions in a country, such as banks and non-banking financial companies, require specific documents to verify the details that are necessary for lending, such as home loans.
Through these documents, financial institutions gain information about individuals and make decisions about loan approval by comparing insights from individuals’ information, such as whether they are eligible for a loan, the applicant’s creditworthiness, and the applicant’s repayment capability.
These Documents Required For a Home Loan act as proof of an individual’s details, such as income, identity, employment, property ownership, and many more. That is why all banks and other financial institutions mainly rely on these documents as proof of the applicant’s information.
That’s why documents affect the entire loan process. Suppose applicants provide the complete and accurate records to the lender. In that case, the loan approval process is much faster than before, and increases the chance of getting a better interest rate and loan amount from the lender. If not, it makes the whole process much longer and decreases the chance of loan approval.
Basic KYC Documents Required For Home Loan
Know your customer (KYC) documents are the basis of the loan application, in which the lender verifies the applicant’s identity, age, and residential address. For Identity proof, they required an Aadhaar card, PAN card, Voter ID, Passport, Driving License; for address proof, they required Utility bills, rent agreement, Aadhaar card, ration card; Passport size 2 to 4 photographs.
Salary Persons Income Proof Documents Required For Home Loan
For a salaried person, lenders often verify applicant’s financial stability and repayment capacity through income documents such as salary slips up to 3 to 6 months, Form 16 issued by applicant’s employer for at least 2 years, bank statement that show the last 6 months’ salary credit, and employment proof in which an offer letter or an employment certificate can be used.
Self Employed Individuals’ Income Proof Documents Required For Home Loan
For self employed individuals, lenders check the business performance and income stability of applicant’s business and their income documents, which are different from those of salaried persons due to their different earning methods and fluctuation in regular income.
There income documents are proof of business in which they can use GST registration certificate, business license, company registration; income tax returns (ITR) at least 2 to 3 years; audited financial statements in which balance sheet and profit & loss statement included; bank statement of last 12 months atleast; business address proof in which they include lease agreement, electricity bill, office registration certificate.
Property Related Documents Required For Home Loan
Before approving a loan to the applicant, the lenders always verify that the property of the applicants is legally valid and free of disputes. They ask documents such as title deed for proving property ownership; sale agreement between buyer and seller; allotment letter if it is a builder property; NOC from builder or society for confirming there is no pending dues; property tax receipts up to payment date; approved building plan which is sanctioned by local authorities; payment receipts in both manner in advance or in partial payment made to the seller.
Employment Proof Documents Required For Home Loan
Banks and other financial institutions want to know that applicants have a stable source of income to repay the loan amount, and these documents reflect the applicant’s job security and consistent income. For both salaried and self-employed individuals, the required documents are an employment letter or ID card and recent salary slips; for self-employed individuals, business registration documents and proof of business ownership.
Some Additional Documents Required For Home Loan
Some financial institutions may request additional documents to ensure transparency and smooth processing, and this depends on the loan amount, location, credit profile, and other factors. These documents can include a PAN card, Aadhaar card, credit report, power of attorney, declarations for different loans, and more.
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Conclusion
Having a home is one of the most significant achievements of life for any individual, but in this inflationary economy without any financial assistance, purchasing a home is next to impossible for any middle-class person.
Frequently Asked Questions
Can individuals apply for a home loan without any income proof?
Applying for a home loan without having income proof is very hard to approve, but there is a chance of approval with a strong financial background, a co-co-applicant, a fixed deposit, etc.
How long does it take to process a home loan after submitting all documents?
If all Documents Required For a Home Loan are complete and accurate, the process takes 5 to 10 working days; otherwise, it might be delayed.
