A home loan is a type of secured loan that helps you to find the necessary funding to buy a house of your choice. Now, with the introduction of an online application process, you can easily find the right loan offer, but that process will entail submitting the documents required for home loans.
Keeping these papers handy will streamline the application process and help you save time. So, read on to learn about it in detail.
Documents Required for a Home Loan
In the home loan documentation process, few documents are required for availing a home loan. These are:
- KYC documents like voter ID card/PAN card/Aadhaar card, Passport, and driving licence.
- Loan application form with a photograph
- Residence proof
- Employee ID card of the borrower
- Bank account statements of the last 3 months for salaried and self-employed borrowers
- Last 3 months’ salary slips for salaried individuals and the ITR of the previous financial year for self-employed individuals
- Proof of business
These are the essential documents required for home loan documentation. However, additional documents may be required during the process, which you must submit.
Eligibility Criteria for Home Loan
Apart from knowing the documents required to get a home loan, you should also know the eligibility parameters. Now, this criteria defines if the borrower is eligible to avail of the loan. These are as follows:
- Age: 21 to 65 years
- Credit score: Ideally 750 or above
- Employment type: Salaried and self-employed
- Monthly income: As per the financial institution
Now, these are some tentative parameters, but the actuals will vary as per the choice of the financial institution. So, for details regarding this, you need to visit the preferred lender’s website.
Application Process for a Home Loan
Once you fulfil these parameters and have the papers ready, you can apply for housing credit. Moreover, to apply for this financial product has gotten really easy over the years, and all credits go to today’s advanced technology. A borrower can visit their chosen lender’s nearby branch or apply for a home loan online.
The online application process is comparatively easier than visiting a bank. You can visit your chosen bank’s official website or mobile app and fill out the application form by giving all the required details, selecting the amount and tenure and submitting it.
In order to approve the loan, the bank will go through the documents required for the documentation process. It starts processing your application which includes checking the CIBIL score, the value of the property you want to purchase, estimated calculation on the basis of your liabilities and income, and more like this.
After thoroughly verifying and evaluating all the documents, the bank will decide whether to reject or approve the home loan.
Benefits of Home Loan
- Low-interest Rate: The interest rate of a home loan is lower than all the available loan types. If you ever face financial difficulty, you will get a top-up on the obtained home loan at an even lower interest than other unsecured loans, and you can quickly solve the problem.
- Property’s Due Diligence: When someone goes through a bank to buy a house, the bank conducts rigorous checks on the property you want to buy from a legal perspective and will also check if all the produced documents are valid. A due diligence check like this reduces the plausible risk of getting scammed in the process. Now, if the property receives the bank’s approval, it implies your property is safe from any legal issues.
- Zero Penalties on Prepayment: When a borrower takes a home loan, you can prepay the housing loan whenever you have a lump sum amount without paying any penalty for prepayment. Moreover, this helps you close the home loan before the set tenure.
- Long Tenure for Repayment: Unlike other loans, a home loan comes with a longer period for repayment. The tenure can be for 25-30 years. It also depends on the amount of home loan you are applying for to buy a house. This way, the longer tenure to repay the original amount and the applied interest rates reduces the monthly EMIs, which also reduces the borrower’s burden.
With all the advantages, application process and documentation of the housing credit out of the way, let’s understand the points you need to check before applying for this financial product.
Tips to Consider Before Applying for a Home Loan
Following are some points that you need to keep in mind before applying for a home loan –
- Check your credit score and optimise it if necessary. This way, you can get the best loan terms possible. You should also make sure that you make your EMI repayments on time.
- You need to review the additional charges associated with the loan. This will include processing fees, legal charges, etc. Together they can increase your overall debt, which is not ideal.
- You should always choose your tenure wisely. A longer tenure can reduce the EMI amount, but you will pay more interest over a more extended period. Whereas, if you opt for a shorter tenor, you can be debt-free sooner, but it might stretch your finances every month.
You should check your home loan affordability and eligibility with the help of a home loan EMI calculator. You can also check the EMI amount, and how it alters as per the tenure and different loan amounts to find the most feasible solution for you.
Final Thoughts
Buying a house has always been a dream of many people. However, making this dream come true requires significant financial prowess, and this is where home loans come to your rescue. Housing loans allow you to buy the house of your dreams without much hassle. But, do keep the documentation handy and meet the eligibility parameters without fail to make this process even more accessible.