A home loan is one of the easiest financing options that you can leverage to raise capital for constructing your house.
However, to ensure a quick application process for the credit facility, you need to ensure that you keep all the necessary home loan documents handy.
This will allow you to reduce your last-minute hassles in arranging all your documents. In fact, you can reduce your chances of making blunders during the documentation process.
Home Loan Documents Required to Apply
Here are all the home loan documents you need to prepare while applying :
- Age Proof:
- Driving License
- Life Insurance Policy
- PAN Card
- Birth Certificate
- Photo Identity Proof:
- Aadhaar Card
- PAN Card
- Voter ID
- Driving License
- Address Proof:
- Property registration records
- Bank statements
- Voter ID
- Property tax receipt
- Utility bills
- Employment Details:
- Annual increment letter
- Appointment letter
- A certified copy of Form 16
- Income Proof:
- Salary slips for at least the last 3 months
- Bank account statements
- Property Documents:
- Sale agreement or sale deed
- Receipt of the land tax
- Allotment letter from the housing board, society or the private builder
- No objection certificate issued by the housing board or builder
Note: These are only indicative home loan documents. Lending institutions may ask you to submit additional records to verify the information provided by you or to check your eligibility.
How to Increase the Chances of Getting a Home Loan
You can follow the strategies mentioned below to enhance your chances of getting approval on your request for this credit facility:
1. Increase CIBIL Score
The CIBIL score is not a must-have eligibility criterion for a home loan. Still, lending institutions check the credit report and score before approving loan requests to ensure that their applicants have a fair repayment track record and they are creditworthy. This is why, if your CIBIL score is lower than 750, you need to make extra efforts to improve it. In this regard, on-time EMI payment, maintaining a healthy credit utilisation ratio, etc., can enhance this score.
2. Declare Additional Incomes
You may have additional income sources, such as earnings from rent, investments, interest, etc., complementing your salary. While applying for the loan, you need to declare all these side hustles to your lending institution. Since you can repay more conveniently with additional income, your financial institution can approve your loan requests without hesitation.
3. Apply With a Co-borrower
In a joint loan, you and your co-applicant share the responsibility to pay the instalments. This is why joint loan is a less risky financial contract for your lender. They know that even if one of the co-borrowers fails to contribute towards the instalment, the other will submit the full amount. As a result, lending institutions approve the joint home loan faster.
Benefits of a Home Loan
You can leverage the following benefits by obtaining a home loan:
1. Longer Tenure
Unlike other credit facilities, home loans come with a longer tenure of around 30 years. You can choose any tenure within this period, considering your repayment potential and pay your EMIs without stressing your monthly budget.
2. Sizeable Loan Amount
Being a secured credit facility, you can borrow a sizeable loan amount with this credit facility. This way, you can build your house without worrying about finance and adorn it with all the features and amenities you want.
3. Home Loan Tax Benefits
A home loan tax benefit lets you reduce your taxable income in a financial year. Under Section 80C of the Income Tax of India, you can get tax deductions of up to 1.5 Lakhs on the amount you pay towards the principal amount. Again, Section 24B of the Income Tax of India allows you to avail of a tax deduction of up to Rs. 2 Lakhs on the home loan interest outgo in the financial year.
Things to Check While Applying for a Home Loan
Following are some of the aspects you need to consider before applying for a home loan:
1. Interest Rate
The cost of your borrowing depends significantly on the home loan interest rate. Therefore, you need to choose a lending institution that charges a lower rate to reduce your interest outgo. To find such a lender, you should ideally compare different lending institutions before selecting one.
2. Processing Fees
Apart from the interest rate, processing fees and other associated charges like stamp duty, EMI bounce charges, etc., influence the overall borrowing cost. You also need to check and compare these charges while taking a home loan.
3. LTV Ratio
The maximum portion of your house construction cost that you can get from a lender is the LTV (loan-to-value) ratio of the home loan. For example, if the LTV is 80%, you can get Rs. 80 Lakhs as a home loan to build a house for which the budget is Rs. 1 Crore. This rate may vary from one lender to another. By checking this ratio, you can understand how much financial assistance you can get from a lending institution and how much you need to pay yourself.
4. Home Loan Eligibility
You also need to ascertain that you meet every parameter of the home loan eligibility criteria, including age, income, etc., set by the financial institution. This will help you get the credit facility without facing rejection.
In conclusion, with the help of home loan documents, financial institutions verify your information. You need to ensure that you arrange all the required certified papers properly during the application process.