A home loan is the most common option for getting financial support to build a dream home. Can anyone get a home loan without property documents? No. To secure the loan more safely and lawfully, it is necessary to submit all essential documents for maximum reliability and obtain the loan amount more securely.
Read this blog to understand the major documents required for a home loan application and to avoid any issues or delays in loan sanction.
What Are the Property Documents Required for Home Loan?
When applying for a home loan, you will need to submit more than just the standard KYC documents. You will also need to submit various documents related to the property to the lender. These documents help establish the legal ownership and clear title of the property you intend to purchase or construct. Here are the major documents required for home construction loan:
A. Property Documents
Deed of Sale or Sale Agreement or Share Certificate (Original)
It helps identify the property’s legal ownership. This contains information on the property’s physical location, the buyer and the seller, and the price that has been agreed on.
Receipts for Paid Taxes (Building & Land)
Bank statements and receipts showing property tax payments made at the local town confirm that the taxes are paid in full. This documentation is crucial to check that there aren’t any active tax credits on the property.
Allotment Letter (if applicable)
If the buyer buys a house from the builder, the allotment letter shows the buyer their land ownership. The builder or developer often prepares it. It might contain the property’s address, unit count, and sale price.
Receipts of advance payments for flat purchase
These receipts are the agreements. They show the payments to the builder or sellers when buying the property. Its importance comes from its use in creating payment history and ownership records.
Permission Letter from Appropriate Authority (if applicable)
Certain work may need a permission letter from the authority. In that case, the following observation also needs the letter.
No Objection Certificate (NOC) from Society (if applicable)
The NOC is essential if the property is in any area that attracts certain construction regulations. The letter comes from the concerned authority. This is usually the town or city municipal corporation or the town planning department of a particular locality.
Land Conversion Documents (if applicable)
The property’s location determines if the application needs certain documents. These documents prove the land’s change from farm to Non-Agricultural (NA) use. These are official legal papers. They are from the government bodies that govern industries. They are used to verify real estate ownership.
Power of Attorney for collecting original documents of Property
It is a letter that officially permits one to recover the original property documents on behalf of the client. Another point to consider is that the person who must collect and submit the documents must have the legal power to do so.
B. KYC Documents (Know Your Customer)
Proof of Identity (Any One Required)
Passport:
A valid passport is one of those proofs that validate an individual’s identity.
PAN Card:
A PAN card is also another vital document used for identification, and it’s formally known as Permanent Account Number Card.
Driving License:
For identification, any valid driving license is accepted. It must have your current address.
Voter ID Card:
Your voter ID card is a useful document issued directly by the government, and you can use it to prove your identity.
Aadhaar Card:
Your Aadhaar card is an identity proof document that will be exclusive to you, and you won’t find any other person with the same number.
Proof of Residence (Any One Required)
Electricity Bill:
A recent electricity bill in your name indicates you have a place where you live.
Ration Card:
A ration card can be used as proof of residence.
Telephone Bill:
A telephone bill from any social telecommunication network in the last month can be solid proof of residence.
Employment Letter:
Your employment letter should contain your current address. You can use it as a proof of residence.
Passbook or Bank Statement with address:
A passbook or a bank statement indicating the current address.
C. Financial & Income Documents
Along with property and KYC proofs, lenders require financial documents to consider whether the borrowers have the capacity to repay. These vary depending on employment type.
Home Loan Documents for Salaried Person:
– Salary slips for the last 3–6 months.
– Bank statements for the last 6 months showing salary credits.
– Form 16 and/or Income Tax Returns (ITR) for the past 2–3 years.
Home Loan Documents for Self-employed Professionals/Business Owners:
– Income Tax Returns (ITR) with computation of income for the past 2–3 years.
– Audited financial statements (Profit & Loss account and Balance Sheet).
– Bank statements of both business and personal accounts for the last 6 months.
– Business registration documents such as GST registration, trade license, or partnership deed, as applicable.
Home Loan Application Process: A Step-by-Step Guide
The following are major steps commonly followed to obtain a home loan:
Step 1: Visit the bank’s website or a branch of the bank.
Step 2: Understand the terms and document requirements, including the interest rate. If you believe it’s affordable and safe, submit all essential documents.
Step 3: Pay the mandatory processing fee, which activates the application and covers preliminary bank charges.
Step 4: Once you submit your application form and complete the necessary documentation, the bank may request a face-to-face or telephonic discussion with the applicant. Sometimes visit the applicant’s residence or workplace. This discussion aims to gather additional information about you and verify your ability to repay the loan.
Step 5: The bank evaluates eligibility, property value, and the applicant’s repayment capacity. Based on this assessment, the approval of the loan will be granted with a sanction letter outlining the approved loan amount, applicable interest rate, and other relevant terms and conditions.
Step 6: Once the applicant accepts these terms, the lender typically does a final property check before disbursing funds, often directly to the seller or builder.
The home loan processing time is 1-2 weeks.
Having the right set of documents is essential to completing the loan application process smoothly and hassle-free. Missing paperwork can delay or even reject your application, making it essential to keep property, KYC, and financial records in order. Lenders need these documents to verify ownership, repayment capacity, and legal compliance before disbursing funds. To simplify the process, many banks now offer pre-approved home loans, where you receive in-principle approval based on your financial history even before finalising the property. This not only saves time but also boosts your confidence while negotiating deals with builders or sellers.
FAQs
Can we get a home loan without property documents?
No, property documents are compulsory for home loans. Banks demand these papers to ensure that the property legally belongs to the current owner and that the occupant has a clear title. Failure to acquire these documents will cause the lender to be unable to determine the risk implied, leading to rejection.
How do banks verify property documents?
Sometimes, this is done through the legal department of the bank and by doing a title search. It means affirming the legality of the deeds, showing the property has no encumbrances, and confirming the seller’s private or legal capacity. Additionally, knowing the Documents Required for a Home Loan From a Builder can help ensure you have all the necessary paperwork prepared to facilitate the approval process.
What documents are required for a home loan self-occupied?
There are no extra requirements for self-occupied property. It just needs the same property documents. The status and title of the property are the most important conditions that the lender has to demand, whether the property is occupied or not.
Is Patta mandatory for a home loan?
A patta, or title deed, is a must-have for getting a home loan. If the applicant lacks a patta, then the lender lacks legal proof that he owns the assets used as security. So, the loan could be turned down.
What is a pre-approved home loan?
A pre-approved home loan is an in-principal approval for a loan given based on your income, creditworthiness and financial position. Generally, pre-approved loans are taken before property selection.
Apoorva H P Achar