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Home Loans Required Documentation
After deciding to take a home loan for the purchase of your dream home, the first thing to that needs to be consider is the required documentation for getting home loans. If any of the important documents are not submitted then approval of the home loan can get delayed and there can also be chances of application being rejected.
The procedure for getting a loan starts off with the application form filling, before which you should go through banks website to know about the required documents. Most commonly the documents asked from an applicant are; PAN card, Passport, Voter ID card, Ration card etc. Additionally, banks have different documentation requirements depending upon:
1. Purpose of loan
2. Applicants category
3. Loan amount
4. Term of loan
Documentation for Salaried People
a. Last 3 months salary slips
b. Updated salary certificate
c. 2 years job continuity
d. Appointment letter
e. 2 years Form 16
f. 6 months bank statement
g. For private limited company employees, company profile
Documentation for Self Employed People
a. Business profile on company letterhead
b. Last 3 years IT returns
c. Chartered accountant certified income computation
d. Last 3 years balance sheet & P/L account
e. Last 1 year bank statement for personal & business account
f. For professionals, professional certificate copy
Documentation for Property
a. Khata certificate
b. Last 13 years EC
c. Latest paid receipt for property tax
d. Last 13 years parent documents & rest link documents
e. Already made payment receipts
f. For old house purchase; sellers title documents & sale agreement
g. For flat that is newly constructed; construction or sale agreement & on builders letterhead break up of total cost
The other important point to keep note of are that banks always make sure that repayments to be made by borrower do not exceed 40% of his net salary & lend about 90% of loan amount. If your repayment record has been poor or had defaults for previous loans then it could be very difficult to get approved for a home loan.
Mortgage loan for people with bad credit!
When a Mortgage loan for people with bad credit is taken to purchase a house, a charge needs to be created in favour of the lender. The borrower needs to mortgage the property in favour of the lender- the bank or the housing finance institution. This creates a security in favour of the bank. It enables bank to secure the repayment of the people with bad credit Mortgage loan. In case the borrower defaults on the repayment of the Mortgage loan or the interest, the bank can enforce the security. In the case of housing loans, continuing security of the residential building mortgage to the bank is accepted, provided the value of the property is sufficient to cover the liability with the prescribed margin.
Mortgage is a form of hypothecation of the property. A Mortgage loans for people with bad credit can be secured by either an equitable mortgage, a mortgage by way of memorandum of entry, or by a registered mortgage. The type of mortgage differs from one bank to another depending on the loan amount, value of equity, customer profile etc. An equitable mortgage is created by way of deposit of title deeds. The ownership documents of the property are deposited with the bank. No formal mortgage deed is executed. This is the simplest and cheapest form of bad credit mortgage.
Registered mortgage is the safest form of mortgage. This is also referred to as English mortgage. No documents of property are required to create an English Mortgage. The borrower has to enter into a mortgage agreement with the bank. This deed is then stamped and registered in order to make it enforceable. This is an expensive mortgage. The stamp and registration charges have to be borne by the borrower. The borrower binds himself to repay the mortgage loan amount as per an agreed schedule and transfers property absolutely to the mortgagee (lender) subject to the condition that the bank or lending institution would transfer the property back to the mortgagor on repayment dues.
In case of mortgage by way of memorandum of entry, the borrower has to sign a declaration stating that he is mortgaging the property to the lender. This declaration is entered in the memorandum of entry of mortgage which can be enforced by the bank in case the borrower defaults in the repayment of loan dues.
Once mortgaged, the borrower can neither sell nor transfer the property to anyone else without the consent of the bank. While purchasing a property, the purchaser should do a due diligence exercise and visit the registrars office to see if any prior encumbrances on the property proposed to be purchased by him are there.
Normally, banks prefer to have the first charge on a property. In case the purchaser has availed of a loan from more than one bank, a pari passu charge may be created in favour of the lenders. However, this usually applies to large projects. In case of a pari passu mortgage, if there is any default in repayment, all the lenders share a right on the property as per the proportion of the loan amount disbursed by them.
The charge needs to be registered with the office of the registrar. Both the lender and the borrower need to be present. The mortgage deal needs to be executed on a non-judicial stamp paper.