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Home loan steps: The complete guide

Saturday, June 09, 2018

For providing home loans, some banks may have different guidelines. However, by and large, most have some common requirements. Here is a step-by-step guide to avail home loan from banks.

Step 1: Documentation requirements
If you are employed:

  • Verification of employment form
  • Latest salary slip/salary certificate showing all deductions for at least the past six months
  • Form 16 from your employer for the past three years.
  • If your job is transferable, a permanent address needs to be provided.
  • If you have been in your present employment / business or profession for less than a year, mention details of occupation for the previous five years, giving position held, reasons for change and period of the same.    

If you are self-employed:

  • Balance sheet and profit and loss account of the business/profession along with copies of individual income tax returns for the past three years as certified by a CA.
  • A note giving information on the nature of the business/profession, year of establishment, present bankers, form of organisation, clients etc.
  • Your net worth as an applicant/co-applicant.

Step 2:
Submission of property documents

  • Title deeds of the builder/land owner for a period of at least 13 years.
  • Development agreement between the builder and land owner if applicable.
  • Power of Attorney executed in favour of the builder, if applicable.  
  • The khata certificate. (Basic document indicating ownership of property as entered in the register of the government authorities.)
  • Up-to-date tax paid receipts of the property.
  • A sanctioned plan and licence.

Step 3: At the bank

  • An agreement for sale and a construction agreement with the borrower.
  • A comprehensive legal scrutiny will be done
  • Pre-sanction inspection of the property will be carried out.
  • Credit appraisal and personal interview
  • Following this, a sanction letter will be issued
  • Acceptance of sanction letter.
  • Administrative fee to be paid at this juncture.

Step 4: Final documentation for the loan

  • Tri-partite agreement between the borrower, builder and HFC to be submitted  
  • Loan papers to be signed by the applicants
  • Your guarantors should execute the guarantee agreements
  • The original documents executed with the builder to be submitted

Step 5: Disbursement of the loan

  • Inspection of the property will be carried out to ensure progress of work done.
  • Following this, there will be a release of loan amount directly to the builder to coincide with the progress of work done as per the agreement with the builder
  • No objection certificate from the builder to mortgage the property in favour of the HFC to be obtained.
  • No objection certificate to be obtained from other Housing Finance Companies if the builder has availed a project loan, to release the mortgage right over the flat to be financed by the company you are securing a loan from.

Step 6: After release of the loan amount

  • Receipt to be obtained from the builder for the amount released
  • The sale deed, duly registered, must be obtained
  • In addition to this, an up-to-date tax paid receipt would be sought
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