Eligibility and documentation
A considerable amount of time and effort
is spent on determining the eligibility and completing the
documentation while applying for a housing loan. It is advisable
to keep in mind some general conditions regarding determination
of eligibility and the documentation requirements in order
to expedite the loan process. The exact requirements may vary
amongst different banks and housing finance companies depending
on the purpose of the loan, amount required, tenure etc.
Mortgage loans are available to individuals
(salaried and self-employed), sole proprietorship, partnerships,
and limited companies. Usually, loans to trust, societies
and Hindu Undivided Family (HUF) are not encouraged by banks.
The loan amount eligibility depends on amount eligibility
depends on who the applicant is.
Agreement value of mortgaged property
Bank finance 60 to 85% of the agreement
value of a property. If you are purchasing a flat for Rs 40
lakhs but the agreement value of the flat is Rs 25 lakhs,
you will get finance up to a maximum of Rs 15.30 lakhs i.e.
85% of 25 lakhs. A difference between the agreement value
and the value one pays may be on account of legal charges,
stamps duty, valuation etc.
Age of application
The minimum stipulated age for a borrower
is 22 to 25 years, and the maximum age varies between 58 and
65 years. The maximum age is the age at the expiry of the
loan. For example, if your age is 45 years and the bank is
60 years, you can get a loan for a 15 years tenure only.
The income determines the repaying capability
of the person. If the income of the applicant is lower than
the required income to service the installments, a co-applicant
can be added. The income considered in such a case will be
of both the applicant and co-applicant.
Purpose of loan
The purpose of the loan may be to buy a
plot, ready property, under-construction property, or construction.
Once a property has been identified, you may approach a bank
or housing finance company with a loan application.
Information and documents that need to be submitted
while applying for a loan:
For all applicants:
- Application from filled in.
- Processing fee (may be fixed or a percentage of the loan
- Photographs of the applicant and co-applicant.
- Proof of income.
For self-employed individual:
- A brief note on the nature of business, year of establishment,
present bankers, form of organization, and the applicant
- Statement of total income, income tax assessment orders
and returns for the last few years.
- Balance sheet and profit and loss account for last few
- Copy of partnership Deed if it is a partnership firm
or copy of Memorandum of Association and Articles of Association
if it is a company.
Other documents that may be required:
- Net worth statement of applicant/ co-applicant.
- Copies of LIC policies.
- Particulars of family member in the prescribed format
– name, age, relationship, occupation, and income.
- Particulars of guarantor/s in prescribed format with
proof of their income.
Documents of property to be submitted:
- Original agreement with the builder.
- Tripartite agreement from builder.
- Certificate copy of approved plan.
- Certificate from the legal advisor of the builder that
the property is free from encumbrances and other charges.
- Copies of receipts of payments made to builder
- Certified copies of all documents pertaining to the property
along with up-to-date no encumbrance certificate.
- Certificate from builder’s chartered accountant
certifying that the builder has not mortgaged the property.