Documents Required for Home Loans
Below are the lists of documents required for availing of home loan by each category of individuals.
Salaried Individual.
1) One passport size photo each of applicant and co applicant as applicable.
2) Identity proof – copy of either of Pan Card, Driving License or Passport.
3) Residence proof – copy of Passport, Ration card or Rent agreement.
4) Latest telephone bill copy.
5) Latest Salary certificate or 3 salary slips in original with deductions bifurcated.
6) Latest form 16, if applicable.
7) Last 6 months banks statement, with 6 salary credits reflected. In the event of a recent job change, atleast one salary credit to be reflected in the new statement.
8) Appointment letter and relieving letter copy if less than 6 months in current job.
9) Any additional income claimed to be backed by documentation and bank statement.
10) One processing fee cheque for an amount of 1 % of loan amount favoring corresponding bank.
Self-Employed/Businessman.
1. One passport size photo each of applicant and co applicant as applicable.
2. Identity proof – copy of either of Pan Card, Driving License or Passport.
3. Residence proof – copy of Passport, Ration card or Rent agreement.
4. Latest telephone bill copy.
5. A brief introduction of Business/Profession.
6. Balance Sheet, Profit and Loss account and statement of income with Income Tax returns for the last 3 years certified by a CA.
7. A photocopy of Advance Tax payments (if applicable).
8. A photocopy of Registration Certificate of establishment under shops and Establishments Act/Factories Act.
9. A photocopy of Registration Certificate for deduction of Profession Tax (if applicable).
10. Bank statements of current and saving accounts for the last 6 months.
11. A photocopy of Certificate of Practice (if applicable).
12. A photocopy of all bank loan statements and repayment track (if applicable).
13. A photocopy of the first and last pages of the Ration card or a copy of PAN/Telephone/Electricity Bills of in the name of both company and individual.
14. A photocopy of LIC policy (if applicable).
15. One processing fee for an amount of 1 % favoring corresponding bank.
Non resident Salaried Individual.
1) 1 One passport size photo each of applicant and co applicant as applicable.
2) Identity proof – Latest and valid Passport copy of applicant and co applicant.
3) Residence proof – copy of Passport, Ration card or Rent agreement.
4) Latest Salary certificate or 3 salary slips in original with deductions bifurcated.(In English or to carry a translated version attested by embassy)
5) Latest employment contract with sign and seal legible.
6) Last 6 months banks statement in original, with 6 salary credits reflected. In the event of a recent job change, at least one salary credit to be reflected in the new statement.(No net statement accepted)
7) Appointment letter and relieving letter copy if less than 6 months in current job.
8) Any additional income claimed to be backed by documentation and bank statement.
9) NRO account statement for a period of 6 months.
10) One processing fee cheque for an amount of 1 % of loan amount favoring corresponding bank.
Pre-Paying a HOME LOAN.
Taking a Home Loan, is probably the biggest and longest debt most people will ever take in their lives.While taking a loan, applicants usually take on affordable equated monthly installments(EMIs).
However,one has to be careful because any miscalculation can result in the risk losing one's home or in a foreclosure,if one regularly defaults on the loan repayment.As an applicant, the best way to manage your loan is to pay more during each EMI;i.e.,by prepaying your loan.
Prepaying your loan considerably reduces your loan term. Generally a home laon has built in factors, such as the interest rates,amount and the term.As an individual borrowing from a housing finance institution (HFI), you cannot change the first two factors because they have been locked into your agreement or contract.
However, a borrower can change the term of the loan, by prepaying the loan and getting rid of it early.This means that you may actually be able to pay off a loan in 20 years,instead of 30 years you were initially prepared to pay.
Some HFI's include a penalty for pre paying a loan in the loan agreement,as they would not want the borrower to pay off the loan prematurely.This way, the borrower continues to pay higher interest for longer period.
Some prepayment penalties may allow you to procure a lower interest rate, while some others may not have pre payment penalties as long as you do not pay the entire amount at once.It is always advisable to approach a bank or HFI, where the pre-payment clause or loan redemption charges are not harsh.
Avoid applying for loans from banks that prevent you from pre-paying a loan.
Once a home loan is granted, it comes with some thing called an 'Amortization schedule'.This means that every EMI you pay covers the interest on the loan and the rest is applied to the principal loan amount.Suppose you are paying an EMI of about Rs 10,000 every month.
Most of this money goes into covering the interest, while a few odd thousands go into paying off the principal amount in intial period.If instead, you pay more in your EMI's (for example, an extra amount of Rs 5000) over you loan term period, more of this sum could actually go towards paying off your principal and therefore help you pay off your loan earlier than you expected.
The additional monthly payments will now directly go into the equity you own in your home and the only way you will be losing out on anything, is if your home depreciates in value which rarely is the case.All in all, you end up benefitting by reducing the amount of interest you owe on your home and also completing your term ahead of time.
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