Owning a home is a dream for almost everyone. Especially millennials and Generation Z have created a boom in real estate as many are aspiring to own a home that is cosy and brings solace after a long day at the office. Therefore, a home loan becomes a vital way to achieve this endeavour. As it’s a significant financial investment, applying for a home loan must be done carefully. Because a tiny mistake can cause rejection and put a halt to your dream of owning a home.
Although the steps involved in applying for a home loan are not complicated, there is a lot of information to gather, from using the home loan application to the required documents. To make things easier, Let’s prepare a checklist of all the things to be done before applying for a home loan.
Housing Loan Checklist
1. Interest Rate
Interest rate is the most important checklist item that should be checked before finalising your home loan application. It can be the deciding factor on how much a home loan will cost you. Repayment of a home loan is a long-term financial commitment, so managing monthly expenses can be challenging. Hence, getting a home loan at interest rates that match your current financial capabilities is imperative.
Before approaching a financial institution, use an online home loan EMI calculator and get an approximation of how much EMI you’ll pay at the chosen interest rate. Almost every fintech firm offers an online home loan EMI calculator on their website so you can make comparisons and choose the loan amount, repayment term, and interest rate you can afford. Having realistic input about EMIs can help you prepare for how to adjust your lifestyle to manage the expenses. You can choose a fixed or floating interest rate on a home loan based on your preferences.
2. Credit profile
Your credit profile will have a direct impact on your home loan journey. If you have an excellent credit score of more than 750, you can expect smooth home loan processing and can expect a substantial loan amount to be approved without any hassle. However, if your credit profile doesn’t meet the eligibility requirements. In that case, the fintech firms may have second thoughts about approving your home loan at lower interest rates or reject the application altogether. Hence credit score should be the top priority in your checklist that must be maintained at any cost before applying for a home loan.
3. Documents Required
The most essential checklist item that most applicants make mistakes or miss is the submission of all the required documents to get a home loan. Missing documents or mismatches in the information provided and what is present in documents can directly lead to rejections. The three groups of documents needed are KYC, proof of income, and property documents. Here is a list of documents most fintech institutions request the applicants to submit along with the home loan application
The KYC documents are used to confirm the borrower’s name, age, address, etc. so there are no chances of fraud or identity theft.
- Passport size photographs
- Proof of Residence: Electricity Bill, Ration Card, Employment Letter, Telephone Bill, Bank Statement or Passbook with address, etc.
- Proof of Identity: Passport, PAN Card, Aadhar Card, Voters ID Card, Driving Licence, etc.
- Age proof: PAN Card, Passport, Birth Certificate, Driving Licence, Bank Passbook,10th Marksheet, etc.
Proof of Income
Your monthly income should match the eligibility criteria in terms of financial history and repayment capacity. Here are documents that act as proof of monthly income.
- Latest Salary Slips for three consecutive months
- Form 16 (Part A and B) and ITR (Income Tax Returns) for the past two years
- Bank Account Statement of the previous six months
- Employee ID
- Appointment Letter, Increment Letter, and Employer Certificate
Financial institutions will investigate the prospective property before approving the home loan.
- Paid receipts to the home builder
- Certificate of Commencement
- Registered agreement for sale
- Approved building plan copy
- Registration receipt
- Property Sanction Letter
- Occupancy Certificate
- Society maintenance payment copy
- Society Share Certificate
- Property Insurance copy
- Society Registration Certificate
- Possession Letter
- Copy of electricity bill
- NOC (No Objection Certificate) from apartment society
After getting a fair idea of EMI and interest rates using an online home loan EMI calculator, you must ensure the above checklist is followed. Once you are ready with all the documents, have a good credit score, and have a clear understanding of the home loan process, approach a suitable financial institution and submit an application. If you have managed to meet the eligibility requirements and the documents submitted are error-free, you have a great chance of getting your desired home loan amount and low-interest rate that will help you own your dream home and manage the repayments effectively.