Buying a house
is an important financial step for an individual. One of the most
important aspects of applying for a home
loan is gathering the right documents to ensure that the approval process is completed on time. If you
are a first-time home-buyer, knowing the list
of documents that are required in a home loan application can help you
take the necessary steps. This article
lists all the documents that a lender requests in a home loan application.
Why is Documentation Necessary for a Home Loan?
When a borrower applies for a home loan, they are required to submit a few
documents. These documents allow the
lenders to verify the borrower’s identity, income, and repayment ability. The loan amount is
sanctioned on time only if the documentation is
proper. For first-time homebuyers, the process might feel challenging,
but a clear checklist can be helpful.
Let us look at the documents required for a home loan application.
Documents for Identity Proof
Lenders verify the borrower’s
identity with the following documents:
•
Aadhaar Card or passport
•
Voter ID or a driver’s license
•
PAN card – mandatory for most
loan applications.
Using these documents, the
lender verifies the borrower’s personal details, such as their name, age, and nationality, which are a key
part of the eligibility process.
Address
Proof
After the
identity, the lender verifies the borrower’s permanent and current address.
The documents that are considered valid
address proof are as follows:
· Utility bills such as electricity, water,
or gas bills
· Passport or an Aadhaar card
· Rental agreement, if applicable.
While submitting
these documents, make sure that the address details match all the submitted documents. This can help you avoid
re-verification.
Income-Related Documents
Income
verification is an important part of a loan assessment since it allows lenders
to assess your repayment ability. The
documents required may be different for salaried and self-employed individuals.
Salaried individuals need to submit:
· Their salary slips for the past three to
six months
· Form 16 or income tax returns
· Bank statements that highlight salary
credits.
In the case of self-employed individuals,
the documents required are:
· Income tax returns for the past two to
three years
· Audited financial statements of the
business
· Bank statements for the past six months.
The documents
allow the lenders to understand if the borrower can manage EMI payments throughout the loan’s tenure.
Proof of Employment
Borrowers need
to submit employment-related records to prove their income stability. In the case of salaried applicants, an
employment certificate or an official ID card may be required. Self-employed
professionals may need to submit business registration certificates or professional licences.
Documents of Property
When a
borrower applies for a home loan, they need to submit property-specific documents required for home loan since the property purchased is used as
collateral. These documents prove legal
ownership and are used to identify whether the property is free of disputes. Some of the common
documents are as follows:
· The sale or title deed of the property
· Agreement of sale between the buyer and the
seller
· No Objection Certification (NOC) from the
relevant authorities
· Property tax receipts.
With valid
property documents, lenders make sure that the asset used as collateral is legally valid and transferable.
Photographs and Loan Application Form
Borrowers need
to submit a few passport-sized photographs. Also, make sure that the information provided in the official
application form is accurate, as inconsistencies may delay the fund disbursement process.
Checklist for First-time Homebuyers
Here is a checklist for
borrowers who are applying for the first time.
· Proof
of Identity: Aadhaar, PAN,
Passport, or Voter ID
· Proof
of Address: Utility bills,
Aadhaar, or Passport
· Proof
of Income: Salary slips,
ITR, or audited financials
· Employment
Proof: Employer ID or
business registration documents
· Property
Documents: Sale deed,
building plan, NOC, tax receipts
· Passport-size photographs and a filled
application form.
Common Mistakes to Avoid While Providing Home Loan Documentation
First-time home
buyers may face challenges due to incomplete paperwork. Some of the common mistakes that can help them avoid
challenges are as follows:
· Submitting expired documents, such as
outdated passports or utility bills.
· Details in the address or identity proof
are not similar
· Missing signatures on property papers or
the application form
· Delays in obtaining NOCs or approvals from
local authorities.
By making sure
that all the documents you submit are correct, you can reduce the chances of application rejection.
Conclusion
For first-time
buyers, having a checklist of the necessary documents for a home loan application can simplify the document
submission process. These documents allow the
lender to verify the borrower’s identity, address, employment, property
and the ability to repay. Having these
documents organised can improve the chances of swift approval and reduce last-minute complications.
