Keep your documents ready before seeking home loan

The thought of buying a house can cause anxiety for many of us. Taking a home loan to fund this dream can add to this anxiety.

What with loads of paperwork and form-filling and getting attested copies of the documents, it can be an arduous process. Often the paperwork takes up more than 70 per cent of the time, from applying for the loan to getting the cheque in hand.

Looking to reduce the stress? Use the pointers below to be ready with the required documents before applying:

Common documents

All the borrowers, either the salaried or the self-employed, have to produce documents such as a copy of pan card before applying for the loan. You will need a photocopy of the first and last pages of your ration card, telephone or electricity bills and a photocopy of your bank statement for the last six months.

Ensure that you have at least the last six months' telephone and electricity bills. Try to collect bank statements for one full year. You will also have to have copies of your passport size photograph that was taken recently.

Make sure that your bank statement does not reflect any bounced cheques or charges for not maintaining a minimum balance. Such events could hamper your credit rating and ability to get that loan.

Banks separate home loan borrowers into two key categories: salaried and self-employed or businessmen. The paperwork may differ for the two types of borrowers.

Documents required from a Salaried individual

If you are a borrower dependent on your monthly salary then the first thing that you will have to get is your salary slip and Form 16 A. A photocopy of statement of investments such as fixed deposit certificates, shares and any fixed asset can be used to support your financial status. The bank will also ask for a photocopy of your life insurance policies with the latest premium payment receipts.

You will have to give the identity card issued by your employer or your company's visiting card as a proof of your employment.

The bank statements that you submit will be considered as the proof your income through investments and assets.

The banks generally take their decision to grant a loan based on your income level.

You can have a co-borrower, someone who shares your loan obligation, in case your income level does not support your requirement. The co-borrower has to be the co-owner of the property.

Documents required in the case of co-borrowers are similar to the documents required from a single borrower.

In case you are a businessman, get a copy of the balance sheet, profit and loss account and statement of income of your business with income-tax returns for the last three years certified by a charted accountant. Some banks might also ask you for a photocopy of advance tax payments and registration certificate of establishment under the Shops and Establishments Act or the Factories Act.

You will also have to get a copy of your registration certificate for deduction of professional tax (if applicable). If you have already borrowed from another bank then you will have to give the details of the loan taken. These are the documents that have to be submitted apart from the common documents mentioned earlier. You will also have to submit proof for the documents you produce.

Documents relating to property

If you are buying the house from another person then you have to produce land documents indicating ownership — photocopies of title deeds, if applicable. You have to have a certificate by the legal advisor of the builder to the effect that the builder has a good reputation and it is free from encumbrance and other charges.

You should have a certified true copy of approved plan, allotment letter, possession letter, lease agreement, if applicable (property bought from a development authority). In case the bank wants to opt for a registered mortgage then a mortgage deed and a no-objection certificate from the developer, society or development authority as applicable.

You will also have to have personal guarantees, if applicable and in case of alternate or additional security, documents for the same depending upon the security details. A copy of the successful sale and purchase agreement signed by both you and the vendor is required. Apart from this you will also have to have a copy of the latest government or ratings valuation.

It is important to collect the documents even before you apply for your home loan because it will be useful to help you judge the best home loan based on your requirement.

Being prepared with all the right documents can help you save time and effort involved in getting a home loan.

(The author is CEO, BankBazaar.com)

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