HOME LOAN

Eligibility and documentation

A considerable amount of time and effort is spent on determining the eligibility and completing the documentation while applying for a housing loan. It is advisable to keep in mind some general conditions regarding determination of eligibility and the documentation requirements in order to expedite the loan process. The exact requirements may vary amongst different banks and housing finance companies depending on the purpose of the loan, amount required, tenure etc.

Mortgage loans are available to individuals (salaried and self-employed), sole proprietorship, partnerships, and limited companies. Usually, loans to trust, societies and Hindu Undivided Family (HUF) are not encouraged by banks. The loan amount eligibility depends on amount eligibility depends on who the applicant is.

Agreement value of mortgaged property

Bank finance 60 to 85% of the agreement value of a property. If you are purchasing a flat for Rs 40 lakhs but the agreement value of the flat is Rs 25 lakhs, you will get finance up to a maximum of Rs 15.30 lakhs i.e. 85% of 25 lakhs. A difference between the agreement value and the value one pays may be on account of legal charges, stamps duty, valuation etc.

Age of application

The minimum stipulated age for a borrower is 22 to 25 years, and the maximum age varies between 58 and 65 years. The maximum age is the age at the expiry of the loan. For example, if your age is 45 years and the bank is 60 years, you can get a loan for a 15 years tenure only.

Income required

The income determines the repaying capability of the person. If the income of the applicant is lower than the required income to service the installments, a co-applicant can be added. The income considered in such a case will be of both the applicant and co-applicant.

Purpose of loan

The purpose of the loan may be to buy a plot, ready property, under-construction property, or construction. Once a property has been identified, you may approach a bank or housing finance company with a loan application.

Information and documents that need to be submitted while applying for a loan:

For all applicants:

• Application from filled in.
  
  
• Processing fee (may be fixed or a percentage of the loan amount)
  
  
• Photographs of the applicant and co-applicant.
  
  
• Proof of income.

For self-employed individual:

• A brief note on the nature of business, year of establishment, present bankers, form of organization, and the applicant is engaged.
  
  
• Statement of total income, income tax assessment orders and returns for the last few years.
  
  
• Balance sheet and profit and loss account for last few years.
  
  
• Copy of partnership Deed if it is a partnership firm or copy of Memorandum of Association and Articles of Association if it is a company.

Other documents that may be required:

• Net worth statement of applicant/ co-applicant.
  
  
• Copies of LIC policies.
  
  
• Particulars of family member in the prescribed format – name, age, relationship, occupation, and income.
  
  
• Particulars of guarantor/s in prescribed format with proof of their income.

Documents of property to be submitted:

• Original agreement with the builder.
  
  
• Tripartite agreement from builder.
  
  
• Certificate copy of approved plan.
  
  
• Certificate from the legal advisor of the builder that the property is free from encumbrances and other charges.
  
  
• Copies of receipts of payments made to builder
  
  
• Certified copies of all documents pertaining to the property along with up-to-date no encumbrance certificate.
  
  
• Certificate from builder’s chartered accountant certifying that the builder has not mortgaged the property.