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Document Checklist for Applying for a Home Loan in India

by anveshajain

Are you planning to buy your dream home, but are not sure about where to start? If yes, this article is just what you need right now. Real estate is the biggest investment in one’s life and not all have the capacity to buy a home on full down payment basis. Lack of affordability due to absence of availability of huge amounts of funds required for home purchases is what makes home buyers apply for home loans. It is difficult to pay such vast amount in one go and to reduce this burden one opts for home loan and pays EMI for a fixed tenor against the loan. This reduces the stress and facilitates easy buying of a home. For many, availing of a home loan can be the most tedious task as it may require several visits to the bank as well as excessive paper work. If you already know how to apply for a home loan, then most of your time is saved. However, for those who are not familiar with the process, here are simple steps to how to get a home loan in India and the documents one must check before applying for home loan in this country.

  1. Check your Credit Worthiness

Before applying for a housing loan in India, one of the main thing to check is your credit worthiness i.e. your CIBIL score. CIBIL score is a three-digit number ranging between 300-900 that represents a person’s credit rating and history. Based on your score, the lender will sanction you a home loan. Anything between 750-900 is considered a good CIBIL score. Your CIBIL score will also give your lender the knowledge of your other loans and repayments and whether you have defaulted on any of them. Thus, it is advised that you get your CIBIL report much in advance before applying for a home loan so that you have time to better your CIBIL score, if it needs improvement, by prepaying one or more outstanding loans. It is worth mentioning that defaulting on your credit card dues or EMIs adversely impacts your score. So, always try to clear the credit card dues and pay the EMIs on time.

  1. Assess your Financial Situation Before Applying for Home Loan in India

It is utmost important to assess your cash flow before adding any home loan EMI to your monthly expenses. Noting down your expenses, savings, and other investments will give you an exact picture of the home loan amount required and you will also get a better understanding of how much funds you must set aside each month to repay your home loan. You do not want to apply for a home loan and then realise that you have over committed on the EMIs. These details will help you from any future financial stress as the home loan interest rates, which are linked to external benchmarks, can increase anytime (if one has opted for the floating interest rate) due to reasons beyond your control. 

  1. Analyse the Bank’s Home Loan Eligibility Criteria

Any bank will assess your repayment capacity before approving any home loan amount. Repayment capacity, simply put is your net monthly surplus income i.e. your gross monthly income minus expenses. This figure give the bank an idea of your capability to repay your home loan EMI on time. Higher the monthly income, the higher will be the eligible amount for loan. Based on this criterion, if your bank approves a lower amount than you require for your house purchase then there are ways to increase your loan eligibility. Opt for longer home loan tenure to reduce your monthly outgo/expense and get a higher home loan. Another way to boost your eligibility is to prepay one of your existing loans. Mention or show proof of your bonuses (annual/quarterly), if any, as the bank will add it to gross income.  

  1. Arrange the Documents Before Applying for Home Loan in India

Several documents are required while applying for home loan. It is always better to plan and arrange all these documents much in advance to save time on your home loan application process and also to avoid rejection of your application due to absence of any of the required proofs. Documents like PAN Card, Aadhar, financial proofs and statements, address proof and employment-related documents are a must to apply for a home loan. Income tax returns are also mandatorily required while applying for a home loan. Make sure to have all these documents ready before approaching a lender for home loan.

  1. Submitting Your Home Loan Application

After shortlisting a bank, an online application form for home loan can be applied on the lender’s webpage. It might appear to be a long form, but essentially requires simple personal details, such as personal, income, employment, project property details, such as value of the property and required loan amount. The form also requires one mention the initial amount that will be paid as a down payment.

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