Required Documents for Home Loan

Having one’s own home is no more a dream now, with the help of Home Loan this dream can be easily turned into reality without doing much. We understand your emotions for your home as it is the place where you make best of your memories with your family and near and dear one’s. We also understand the value of your time and the difficulty which you face while the documentation regarding your home loan, hence we try to keep it as minimal as it can be. Though it is a very important part, as this is the only way by which we can know our customer in a better way. The documentation process regarding a home loan is bit complicated when compared to personal loan because of its secured nature. Here you need to give a guarantor and security in form of any of your property paper or anything else, so that we can build a trust on you and can lend you without any risk.

Having a home of your own is no more a dream, it is possible at the finger tip of each us. Get a home loan to build your dream home. Here is the list of few banks document requirements and other details mentioned for applying for a home loan.

Checklist of Documents Required for Home Loan

• Identity Proof: Passport/ Driving License/ Voter ID/ Aadhar card/ PAN Card
• Address Proof: Driving License/ Registered Rent Agreement/ Electricity Bill (up to 3 months old)/Passport/Telephone bill/ Voter ID/ Aadhar card
• Employment Appointment Letter: Required if the current employment is less than 1-year- old
• Financial Documents:
  o 3 month salary slip
  o 6 month bank statement
  o 2 year Form 16 or IT return

Calculate EMI for Home loan

List of Common Documents

• Complete Home Loan Application Form with one passport size photograph.
• Photo Identity Proof: Passport/ Driving License/ Voter ID/ Aadhar card/ PAN Card
• Residence Address Proof: Driving License/ Registered Rent Agreement/ Electricity Bill (up to 3 months old)/Passport/Telephone bill/ Voter ID/ Aadhar card
• Residence Ownership Proof: Sale deed or rental agreement
• Income Proof: salary slip, bank statement and Form 16
• Job Continuity Proof: Appointment letter at employment and validation letter from HR
• Bank Statement: Past 6 months’ document
• Property Documents: Sale deed, Katha, transfer of ownership
• Advance Processing Cheque: A cancelled cheque for validation of bank account
• Investment Proof: LIC, mutual funds, property document etc.
• Financial Documents:
  a. For Salaried Individual: 3 month salary slip, Form 16 and bank statement
  b. For Self-Employed Individual: IT returns for last 2 years along with computation of income tax for past 2 years certified by a Chartered accountant
  c. For Self-Employed Non- Professionals: IT returns for last 3 years along with computation of income tax for past 2 years certified by a Chartered accountant

Documents Required for Salaried Individual

• Loan Form: Bank loan application form to be filled with passport size photographs affixed
• Address Proof: Driving License/ Registered Rent Agreement/ Electricity Bill (up to 3 months old)/Passport/Telephone bill/ Voter ID/ Aadhar card
• Identity Proof: Passport/ Driving License/ Voter ID/ Aadhar card/ PAN Card
• Income Proof: 3 month payslips, 2 years Form 16, Copy of Income Tax PAN
• Bank Statement: 6 months bank statement that shows salary from the employer and any EMI paid for outstanding debit.

Documents Required for Self Employed– Professionals

• Identity Proof: Passport/ Driving License/ Voter ID/ Aadhar card/ PAN Card
• Address Proof: Driving License/ Registered Rent Agreement/ Electricity Bill (up to 3 months old)/Passport/Telephone bill/ Voter ID/ Aadhar card
• Office Address Proof: Property Documents, Utility Bill
• Office Ownership Proof: Property Documents, Utility Bill, Maintenance Bill
• Business Existence Proof: 3 years old Saral Copy, the Company Registration license, Shop Establishment Act
• Income Proof: Latest 3 years Income Tax Returns including Computation of Income, Profit & Loss Account, Audit Report, Balance Sheet, etc.,
• Bank Statement: Past 1 year bank statement
• 1 passport size color photograph

Documents Required for Senior Citizens/Pensioners

• 1 passport size color photograph
• Photo Identity Proof: Passport/ Driving License/ Voter ID/ Aadhar card/ PAN Card
• Residence Address Proof: Driving License/ Registered Rent Agreement/ Electricity Bill (up to 3 months old)/Passport/Telephone bill/ Voter ID/ Aadhar card
• Age Proof: Pan Card or Passport
• Income Proof: Pension Returns Or Bank Statement

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Home loan from bank or NBFC: Which one should you opt for?

When buying a house, we all want to get the best deal on the home loan we avail as it is probably the longest financial commitment we will make impacting our overall portfolio and expenses. However, deciding on the right financial institution to avail the loan from is a rather tricky task, given the market is competitive.

With the rise of non-banking financial corporations (NBFCs) in India, the choice has only gotten wider as customers can now choose not only among banks, but also NBFCs. But did you know that availing a home loan from a bank and an NBFC may seem similar, but work in very different ways?

Banks and NBFCs follow different guidelines when it comes to lending and, thus, home loans disbursed by them are also done on certain different parameters. Find out how these two differ when it comes to assessing an individual for a home loan and which one can you resort to for your home loan.

1. Interest Rates: MCLR vs PLR

Banks operate their housing loan interest rates based on Marginal Cost of Lending Rate (MCLR), which serves as their lending benchmark and is closely monitored by the RBI. On the other hand, loans by Housing Finance Companies (HFCs) and NBFCs are not linked to the MCLR. They are linked to the Prime Lending Rate (PLR), which is outside the ambit of the RBI. So while banks can’t lend at rates below the MCLR, PLR-linked loans do not have such restrictions.

Banks have both floating and fixed rates, of which before only floating rates felt the occasional impact of MCLR. But in February this year it was announced by the RBI that all new loans whether with floating interest rates or base rates will be linked to the MCLR.

An MCLR-linked loan clearly mentions the intervals at which its interest rate will automatically change. In a falling interest rate scenario, this allows customers to receive RBI-mandated rate cuts in a transparent, time-bound manner.

As NBFCs and HFCs are free to set their PLR, it gives them greater freedom to increase or decrease their loan rates as per their selling requirements. This sometimes suits customers and provides them more options, especially when they fail to meet the loan eligibility criteria of banks. But in many cases, for those who easily meet the criteria this may also result in inflated interest rates compared to banks.

2. Loan Eligibility via Credit Score

As paperless financial technology takes prominence, more and more lenders are depending on credit scores to determine loan eligibility. While there are upper caps set on interest rates through MCLR and PLR, the actual interest rate you pay on your loan is linked to your credit score. Leading lenders are known to offer their best rates to customers with a CIBIL score of 750 or more.

While both banks and NBFCs consider credit scores carefully, NBFCs tend to have more relaxed policies towards customers with low credit scores. However, with a very low score, both banks and NBFCs will likely charge you a higher interest rate. In some cases, banks may ask to convert the home loan into a secured loan by mortgaging some asset if the credit criteria is not met, but you still need the loan.

A customer with a low score can in fact start with a loan from an NBFC. Through timely repayment, s/he can improve his credit score. After this, once the bank’s eligibility criteria is met, the loan balance can be transferred to a bank.

To keep yourself ready, make sure to access credit reports by CIBIL or Experian. This will allow you to be ready even before you approach a lender. Since credit scores change every quarter, you can take your time to improve it before you decide to avail the loan in order to get a better rate of interest and disbursal amount.

Major Difference in Home Loans Between Banks and NBFCs

Features	Banks	NBFCs
Eligibility Criteria	Stringent with detailed checks	Easier and faster
Interest Rate Benchmark	MCLR	PLR-Spread
Passing interest rate benefit to borrowers	Not much room for existing borrowers	High chance for existing and new borrowers to benefit from discounts
Interest Rates	Rate of interest will be comparatively lower	Mostly higher than banks but depend on the property and applicant

3. Loan Amount

The actual cost of property is never just the selling price promoted by developers and builders. During acquisition it typically goes up as other costs like stamp duty, registration, an assortment of payments towards brokerage, furnishing, repairs and more always add up. Based on where you are in India, you may have to pay between 3 and 11 per cent of the property value as registration cost alone.

Banks are allowed to fund up to 80% of a property’s value. For example, if you are buying a property worth Rs 50 lakh, you may receive a loan of Rs 40 lakh from banks excluding the registration cost and associated charges of course. The rest of the fund requirements would have to be met by you and often these last mile costs weigh heavily on the final decision to buy a property.

Although both NBFCs and banks are not allowed to fund stamp duty and registration costs, NBFCs can include these costs as part of a property’s market valuation. This allows the customer to borrow a larger amount as per his eligibility.

4. Pre-Payment, Foreclosure and Late Payment Charges

Just like other loans, home loans also have associated charges attached. Both banks and NBFCs will have charges for pre-payment and foreclosure but NBFCs tend to charge much higher. In addition, late payment charges by NBFCs may sometimes be close to 10 or 20% of your monthly EMI, giving you no respite in case you default on any payment. NBFCs also tend to have higher processing fees, although some banks may charge similar amounts.

Whoever the lender may be, make sure to calculate you future interests and factor in additional costs associated with your repayment as home loans range between 10 and 30 years and you may have to bear such high charges in future.

(The writer is CEO at Bankbazaar.com)

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Bank of India(BOI) recover large amount from other banks

The Bank of India(BOI) has recovered Rs 7,000 crore worth Standby Letters of Credit (SLOCs) in the last two months and the balance of Rs 2,000 crore would be recovered in another two months, a top bank official said.

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Bank loan growth – The devil is in the details

One key parameter that is closely watched by economists and analysts to signal growth in the economy is the growth of non-food credit. The needle refused to move even as the government tried nudging banks to increase lending.

The fact that the effect of demonetisation and poor implementation of Goods and Service Tax (GST) is diminishing is visible in the non-food credit growth. Data released by Reserve Bank of India (RBI) shows loan growth of banks has hit a three-year high in November. Credit offtake had touched multi-decade lows in the past year as banks focused their energy on recovery and ‘managed’ their non-performing assets (NPAs). Credit growth was below 5 percent in February 2017.

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Dena Bank to offer the cheapest Home Loan among all Public Sector Banks

Dena Bank on Wednesday announced a new offer on a home loan. The new rate has been pegged at 8.25 percent, which is touted as the cheapest one available. This means the state-owned bank becomes the leader in terms of the cheapest loan rate offered by any lender. Previously, the position was held by State Bank of India (SBI). 

SBI earlier in November had announced to give home loans at 8.3 percent. Notably, the offer by Dena Bank is a part of the retail loan carnival that will start from November 16, and end on December 31 of this calendar year.

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Air India gets Rs 1,500-cr loan from Bank of India(BoI)

Debt-laden Air India has received a loan worth of Rs 1,500 crore from Bank of India to meet urgent working capital needs less than a month after floating a tender in this regard, an airline source said.For the second time in recent months, the flagship carrier has received loans from a public sector lender.

Battling multiple headwinds, the disinvestment-bound airline has been working on ways to reduce its debt, including by way of selling non-core assets and expanding operations.

The source said the airline has received Rs 1,500 crore loan from Bank of India after the tender for the amount was floated last month in order to meet "urgent" working capital needs.A query sent to Bank of India remained unanswered.

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