Purchasing a home in India is a long-living dream for every individual, but not everyone is so strong with a pocket to spend Lakhs of money on the go. Therefore, going for a home loan is a great way for individuals to purchase a home in India. This allows you to fade away from living in a rented house and shifting again and again after the agreement ends.
Earlier, managing the home loan approval process was difficult, but it has been easy with low interest rates and a simplified verification process. With EMI options, entering into the market has made it simpler to get house loans, paying a certain amount initially and then scheduling auto-pay with a monthly EMI.
Most people get confused by the mortgage verification process. That is why we have prepared a dedicated blog that will cover everything about it.
What is the Home Loan Verification Process?
Home loan application verification is essential for getting your loan approved. After you submit the required documents for your home loan, the creditor will check if everything is valid. As part of this home loan application process, the next is to examine the property’s technical and legal details. If all your documents are accurate, you will get the loan approval.
Borrowers’ creditworthiness must be considered based on their qualifications, monthly and yearly incomes, work history, and previous credit arrangements. It will also be checked whether any illegalities were committed in the purchase of the home.
How Does the Home Loan Verification Process Work in India?
- In order to verify ownership documents and initiate the home loan verification process, the NOC and title deed are examined by a legal team.
- Lenders perform a technical inspection of the property’s condition, construction details, and market value.
- The property you want to purchase must meet all federal and state building standards to qualify for a mortgage.
Steps to Follow for the Home Loan Application Process
Step 1: Set Your Budget and Eligibility for a Loan.
The first step in applying for a home loan begins with the amount that you can afford to borrow. Choose the amount whose interest you can effectively manage to pay off without getting overburdened with the amount. To set your monthly budget, list your monthly income, expenses and any other finances that are getting on to your head.
Ahead of everything, keep an eye on your home loan eligibility criteria, check your credit score, and access the credit report. These insights will help you identify what you might qualify for.
Step 2: Look for the Lender and Compare Them
Look for a reliable lender who can easily afford to lend you the required loan amount with suitable interest rates, flexible repayment options and high-end customer service.
While you are looking for a lender, make sure to look for one that has a great reputation in the market, simplified loan terms, process fees and so on. You can go through their website, get in touch with their previous clients, and look for personal recommendations to choose the right lender for you.
Step 3: Collect Documentation
Obtain the necessary documentation for a home loan required by the lender before submitting your home loan application. These documents include identification, addresses, income, employment records, and bank statements (such as purchase agreements or title deeds). In order to expedite the loan process, make sure that all necessary documents are available.
Step 4: Submit Loan Application
Get the right documentation in hand to get everything on track to submit the loan application. You can either complete and submit the application online or by visiting the lender’s branch office. After you have filled out all the required information and attached the document, make sure of its accuracy before submitting the loan application.
Step 5: Verification and Processing of the Loan
Once you have submitted the loan application, it is now the lender’s responsibility to verify and process it further. Everything, including financial history, credit records, and the actual valuation of the property, will be reviewed to verify and process the loan application.
Step 6: Legal and Property Valuations
Lenders conduct property valuations before finalizing loans to determine the value and condition of the property. The lender will also run a detailed review for legal complications, make sure the property is owned by the right owners, and prevent any legal disputes. It is good to have a legal check, as it will help both lenders and borrowers.
Step 7: Letter of Approval and Offer
Upon loan approval, you’ll receive a letter showing your loan amount, interest rate, repayment term, etc. Carefully review the offer letter to ensure it corresponds to your expectations. The lender should clarify any doubts or concerns you have.
Step 8: Documentation and Loan Agreement
Once the legal and valuation checks have been completed, a loan agreement and other relevant documentation will be prepared. You must look closely for details in the loan agreement and associated costs. If you have any doubts regarding the loan agreement or document, it is always great to get legal assistance.
Step 9: Disbursement of the Loan
Next comes the disbursement of the loan, where the lender starts disbursing the loan amount after signing the loan agreement and completing the required paperwork. When it comes to getting loans for under-construction properties, instalments or full payments can be made, depending on the agreement. The loan amount will be credited to the developer or seller as per the signed agreement.
Step 10: Repayments and EMIs
Repayment of the loan is an important phase where you will receive your loan disbursement. Do not forget about the modern-day EMI, which brings together both principal and interest payments each month. It is suggested that all property buyers pay their bills and monthly interest on time to keep a sound credit history and avoid overdue penalties. If you have enough funds in hand, you can even go for prepayment or foreclose the loan.
Home Loan Documents: Important Document Required to Process Home Loans in India
Home loan applications in India are typically approved by banks and financial institutions based on the following documents:
- Proof of Identity
A valid government-issued identification card, such as a passport or voter ID, is essential for establishing one’s identity.
- Proof of Address
Address proof can be provided by documents such as an Aadhar card, passport, utility bill, or rent agreement.
- Proof of Income
For Salaried Individuals:
- Last three to six months’ salary slips
- Detailed copies of the last 2-3 years’ Form 16 or Income Tax Returns (ITR)
For Self-employed Individual:
- A business’ financial statements, including its profit and loss statement and balance sheet
- Recent ITRs (2-3 years)
- Documents related to business registration
- Bank Statements
You will need to obtain your bank statements for the last 6-12 months to evaluate your savings and financial transactions.
- Property Documents
The Sale Deed, the Title Deed, and Property Tax receipts are all necessary when purchasing property.
- Passport-size Photographs
To apply for the loan, you will need recent passport-sized photographs.
- Proof of Employment
Individuals who are salaried could be required to provide a letter of employment or appointment from their employer.
- Loan Application Form
Lender-provided loan application form duly filled out.
- Guarantor Documents
Guarantors will need their financial documents and identification/address proofs.
Conclusion
The home loan verification process is not lengthy, provided you put every document in place and take the right steps. With a home loan, you can get closer to buying or constructing your dream house in India. People who are fall under higher income category having home loan could use the old tax regime to transfer the home loan to one of your family member who are currently having low income to avail tax benefits.
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