What Documents Do Banks Require To Process A Home Loan Request
Anyone who has gone through the process of applying for a home loan will tell you that several documents have to be kept ready, before going to a bank to apply for a home loan. Even if the banking sector has undergone a sea change and has become much more customer-friendly today, they will still ask for all the documents they need before they process your home loan request.
“Lenders today take much less time to process a home-loan request than they did earlier. Banks can grant you a loan in a matter of days. However, all your documents must be in place for that to happen,” states Pallavi Singh, a banking professional, who works with a leading public sector bank in Delhi. “The process would also be much shorter if you are already doing business with the bank in some manner or form. Simply having an account would do the trick,” Singh adds.
What are the documents that banks seek from a home loan borrower?
Banks need to have all personal, professional, income, banking and property-related information about a customer, for processing a home-loan request. Since the ticket-size of such banks are comparatively much higher, utmost care is taken by financial institutions to make sure that the loan is low-risk.
These are the documents they typically seek from a borrower:
Documents that establish personal credentials: First, the bank must know who you are and where you live, which has to be established through a legal identity. Documents such as the passport, the Aadhaar card, the voter card, the driving license and the ration card, etc., are sought for this purpose.
Documents that establish repayment credentials: For most people, buying a home is the biggest purchase they will ever make. They will also invest a large part of their working lives to repay the home loan. This is why it is of utmost importance for the bank to thoroughly check the borrower’s repaying capability. To judge that, they ask the applicant to furnish a number of other documents, which establish his professional credentials. In the application form, all the information about the current employer would have to be mentioned. The salary account statement for the last six months will have to be submitted. The bank will also send a representative to the office to verify the information provided in the form.
Documents that reflect your banking record: By examining the applicant’s bank statement, a lender is able to gauge multiple things. Apart from getting a clear idea about the monthly income, they are also able to check out the applicant’s spending behaviour. Banks also demand income tax return documents to check tax compliance. Since the PAN card is required for almost all financial transactions, borrowers need to provide this document, too.
Banks will also check out your banking history through credit reports to see if you ever serviced a home loan to rule out the possibility that you could be a credit risk to them. They acquire your credit report and credit score from the credit bureau for that purpose.
The property, which the buyer intends to purchase, must be free from all sorts of encumbrances for the bank to extend a home loan. The bank would seek all historical documents that show the chain of ownership in case it is a resale property. These may include the mother deed, sale deed, society membership certificate and previous loan documents, if any. In such cases, the borrower also has to submit property tax payments receipts and maintenance payment slips.
In case it is a new unit, documents showing that the developer has all approvals to build the projects have to be supplied. A copy of the builder-buyer agreement will have to be submitted along with the application form. In most cases, developers tie up with banks to speed up the lending process. This is beneficial for all parties concerned.