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Summary
Banks and NBFC are extending credit to an individual in form of Home Loan. Home loan is a secured loan and original paper are in custody of banks to extend loan. Keeping property paper as collateral is not just sufficient to get home loan. Lenders needs to evaluate borrowers profile, their financials and credit history, existing source of income and stability, where they stay and where to reach them, and several other factors to understand risk and analyse that repayment will be done on time and there would be no defaults.
Most of the verification can be evaluated basis the documents which are extended to support each parameter. For example – PAN card, passport, Driving license, voter id or other documents which is legal document to be established as ID proof. In details below, exhaustive check list of documents needed for processing housing loan are mentioned.
The number of documents needed for Home loan are more than any other secured or unsecured loans. It is important to submit all documents as per checklist at one go, to avoid unnecessary delays and follow-ups with bank or NBFC. It helps in getting sanctions and loan disbursed at earliest. The overall disbursal TAT is better for customer with clear submissions.
Home Loan Documents Checklist
ID Proof
- Passport, Pan Card, Driving License, Voter ID, other as permissible by lender
Financials
- 6 months all running bank statements, Last 3 years Form 16
Fees
- Cheque for Processing Fee if applicable
Address Proof
- Electricity Bill, Rent Agreement, Passport, Driving License, other as permissible by lender
Property Docs
- Sales Deed, Agreement Copy, OC/CC Papers, Property Tax receipt, other as permissible by lender
Forms & Photograph
- Filled and Signed Home Loan form alongwith recent photo with coloured background.
Work details - Salaried
- - ID Card Copy
- - 3 months Salary Slip
- - Appointment letter
Work details - Self Employed
- - 3yrs IT returns & Past 2yrs P&L
- - GST / Incorporation Certificate
- - Article & Memorandum of Association
One of the most relevant document in recent time to evaluate home loan repayment risk is individual’s credit score. Most lender pulls credit report and the underwriting team analyse the financial records as listed in the report before granting home loan approval. Higher the credit ranking and above the approved limit means high probability to get home loan. Credit score or ranking is given by several credit rating agencies like CIBIL, CRIF Highmark and others. Rating or score is a calculated by the bureau by evaluating the financial history like number of bank accounts, loan taken in past, number of credit cards, payment tracks of cards and loans outstanding, all accounts open or closed are included, any default or settlements are negative scoring, timely payments and credit limit are positive scoring and several other computations. Earlier each bureau use its own scoring logic and rating scales, now the process is more or less standardise with scale of 0-900. It’s important to know your credit score. It is possible that borrower might not have a score as they have never taken a loan or card earlier, this doesn’t mean that they will not get a loan.