What documentation is required before approving a home loan?

Because of the introduction of simple home loan policies, purchasing a house property has become a simple thing in today's scenario. The Pradhan Mantri Awaas Yojna (PMAY) is a government of India initiative to provide affordable housing to the urban poor. With the implementation of this initiative, many Indian citizens are demonstrating their ability to purchase homes and become actual homeowners. Credit-linked subsidy schemes allow loan borrowers to pay lower EMIs while also receiving a variety of benefits. It is important to note, however, that not everyone is eligible for a loan.

Before granting home loans, the bank conducts a verification procedure that includes the applicant's verification as well as legal and technical aspects of the property. In the following section, we go over these points in depth.

Verification Prior to Making a Home Loan

The applicant's verification

During this verification, the bank records the applicant's income and assets in order to determine his repayment capacity. Furthermore, the concerned bank officer meets the applicant in person and asks him a series of questions in order to assess his intentions and repayment ability. Witnesses are sometimes verified and questioned as well.

Legal confirmation

Any legal issues should be avoided in order for the property investment to be successful. The bank sends a team of legal experts or certified lawyers to examine all original property-related documents, including title deeds, sale deeds, no-objection certificates (NOCs), and other ownership papers, for verification.

In this stage, the applicant must present all original property documents to a team of legal experts. If the property is under construction, he must present documents proving that the builder has obtained all necessary permissions, including RERA certification, in order to begin construction.

If the applicant is purchasing a used property, he must present all documents pertaining to the property's previous ownership. If the property has changed hands several times since it was built, the buyer must request that the seller arrange for all of the necessary documents.

After reviewing each document, the bank's team will send a report to the bank, explaining why they accepted or rejected the home loan.

Technical validation

During this process, the bank hires a team to inspect the physical condition of the property for which the loan is being applied. The building specifications, such as the map of the property, carpet area, and physical condition, are examined by the technical experts, who then assign a market value to the property. Based on that, the team decides how much money to offer for the property.

It is an important step for the bank because if there are any future defaults, the bank will sell the property on the open market to recover its losses.

The technical team then sends the bank a report stating the property's value.

Conclusion

So these were the critical aspects of the banks' verification procedure before granting home loans. Before applying for a loan, an applicant must carefully consider these factors to ensure a successful loan sanction.

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