Applying for a Home Loan? Here are the documents that you need to keep handy before you approach any bank with your Home Loan application.
Getting a Home Loan is easy these days. As long as you have the necessary documents with you, your Home Loan will get approved and disbursed without any complications. Here is a comprehensive checklist of documents that banks and financial companies require for sanctioning a Home Loan. It’s a fairly lengthy read but so, so important!
Read this. Become very knowledgeable. Buy a home. Simple!
Tip: Check with your Bank or Non-Banking Financial Company to figure out which of the following documents you need to submit, as requirements differ from institution to institution.
The Long List Begins!
The documents mentioned below must be provided when applying for a Home Loan:
— Driving license
— Voter ID
— PAN card
— Aadhaar Card
— NREGA Card
– Driving license
– Voter ID
– Ration card
– Utility bill – telephone, electricity, water, gas, postpaid mobile (less than 2 months old)
– Letter from any recognized Government authority verifying the residence address of the customer
– Letter from your employer (in case no other proof is available)
– Bank Statements/Passbook/ other Government documents such as post office passbook
– Property or Municipal tax receipt
– Pension or family pension payment orders (PPOs) issued to retired employees by Government Departments or Public Sector Undertakings, if they contain the address
– Documents issued by Government departments of foreign jurisdictions and letter issued by Foreign Embassy or Mission in India
Income proof and property proof vary for salaried individuals and self-employed individuals.
– A brief introduction of your business/profession
– Balance sheet, profit and loss account statement of income, proof of income tax returns for the last 3 years certified by a CA
– Receipts of advance tax payments made (if any)
– A photocopy of Registration Certificate of establishment under Shops and Establishments Act/Factories Act
– Certificate of Practice for professionals such as doctors
– Proof of investments (FD Certificates, Shares, any other fixed asset)
– Increment/Promotion letters
– Appointment letter
– Payslip (Last 3 months) with salary account bank statement
– IT returns (for the last three years)
– Investment proof (FD certificates, shares, any fixed asset)
– Documents supporting the financial background of the borrower (liabilities and assets if any)
List of the must-have property documents before applying for a Home Loan:
Sale Deed (Title deed /Mother deed/Conveyance Deed)
The Sale Deed or Title Deed is the most important legal document required while buying a property. It is evidence of the sale and transfer of ownership of the property to you. It is also an essential document if you plan to sell the property after a few years since it serves as proof of ownership. The Sale Deed has to be registered at the Sub Registrar’s office of property jurisdiction within four months from the sale date. Very, very important.
Joint Development Agreement
A crucial document when opting for a property which is part of a joint venture project; the Joint Development Agreement (JDA) is an agreement between a landowner and a builder wherein the landowner contributes his vacant land and the builder undertakes real estate projects on that land. The JDA lets you know whether the landowner or the builder holds ownership of the property you’re buying.
General Power of Attorney
The Power of Attorney refers to a legal consent provided by one person to another, giving authority to the latter to act as the former’s legal representative. This permits the latter to make legal and financial decisions for the former which includes selling or purchasing property on the seller’s or buyer’s behalf. This is a mandatory document especially if the previous sale or purchase of the property was done through a General Power of Attorney.
Sanctioned Building Plan
Before purchasing a property, you have to confirm whether the property has been authorised for construction or not. Always obtain the sanctioned building plan (sanction done by the statutory authority) before purchasing a property. Mind it!
NOC from Government Departments
It is mandatory for builders to get approval (No Objection Certificate) from all Government departments before starting construction on the property. In certain states, NOC is required from almost 19 different departments which includes Fire & Safety, Pollution Control Board, and the Electricity department. The No Objection Certificate is a must-have while purchasing a property.
Supplementary Agreement/Ratification Deed
The Supplementary Agreement is required whenever any change or modification has to be made to the principal agreement. Make sure you obtain this agreement (if any) so you can be aware of all the modified clauses in the principal agreement.
Allotment Letter from the Builder/Co-operative Society/Housing Board
Need to get your loan sanctioned by the bank? Don’t forget to obtain the allotment letter from the Builder/Housing Society. Generally provided only to the first owner of the property, the allotment letter contains relevant details of the property being sold/bought and the amount of money the buyer has paid. This letter is necessary for getting the bank to sanction your loan for the remaining amount. If you’re buying the property from a previous owner, ensure that you request a copy of the original allotment letter.
Sale Agreement between Builder & First Owner
This agreement between the builder and the first owner wherein the developer/promoter is legally responsible for constructing the building as per the sanctioned plan and specifications approved by the local authority. The agreement also contains other details such as possession date, amount to be paid by the purchaser, payment instalment intervals agreed upon, details regarding common areas and other facilities, and a statement of use for which the building is being constructed.
Construction Agreement between the Builder & First Owner
This is a written work contract between the builder and the first owner. This agreement is necessary for the builder to start the work relating to the construction of the building. The agreement also mentions that all the goods involved in the work and the executed work is owned by the person for whom the work was executed.
Copy of Possession Letter from the Builder
The Possession Letter is mandatory if you’re the first purchaser of the property from the builder. This letter is proof that the builder has handed over the property to the purchaser on the date specified in the letter.
Payment Receipts (Builder)
If you’re the first buyer of a property from the builder and you need to apply for a Home Loan, ensure that you collect the original payment receipts from the builder. Banks generally require original proof of payments before sanctioning a Home Loan.
Previous or Current Loans on Property
Before buying a property, you need to be sure that the property is not mortgaged. In case of any current or past loans, you need to obtain the list of documents from the vendor bank. If the loan has been closed, you need to retrieve a copy of the closure letter from the concerned bank.
Sale Agreement with the Seller
The Sale Agreement serves as an important document for the seller and buyer to fix the terms and conditions of the purchase. It does not require registration and generally precedes a Sale Deed. In some states, however, the Sale Agreement is registered and serves as the Sale Deed. If you’re applying for a Home Loan, then you have to pay a stamp duty which is equal to 0.10% of the Sale Agreement value.
Latest Tax Paid Receipt
The local municipality authority levies a property tax which is necessary to maintain basic civic services within the locality. Paying the property tax is the responsibility of the property owner, and not the present occupant/tenant. While buying a property or applying for a Home Loan, ensure that you obtain the original receipts of the property tax paid till date.
Before buying a property or taking a Home Loan, you need to demand the original copy of the Encumbrance Certificate. Issued by the Sub Registrar’s office, this certificate acts as evidence of any past transactions and mortgages on the property. EC is given either as Form 15 (if there were past transactions) or as Form 16 (if there were no transactions on the property).
Demand Letter from the vendor before disbursement
If you’re the first purchaser of the property from the builder, then collect the demand letter issued by the builder. It details the payment due as per the schedule agreed upon by both parties. This is an important document when you are applying for a Home Loan.
Own Contribution Receipt & Bank Statement of the same
This receipt and statement are required by the bank or Housing Finance Company (HFC) that is providing you the Home Loan. This is evidence that you have paid your contribution (i.e. 20% of the purchase value) to the seller. The bank provides a loan for only 80% of the property purchase value.
NOC from the Society/Building Association
It is mandatory for a property buyer to obtain the original No Objection Certificate from the Building Owners Association stating their approval of the transfer of ownership.
No-due Certificate from the Building Association
It is necessary to obtain a No-dues Certificate from the Building Owners Association. This acts as proof that the previous owner has cleared all dues on the property till date. It also entrusts the Association as custodians of all original documents of the property.
Approved Plan of Construction
This is another mandatory document to be obtained in case of first purchase of a property from a builder. This is proof that the builder has obtained approval from the local development authority for constructing the particular building.
If the property you’re buying is on converted land, you need to obtain the conversion order before applying for the Home Loan. This is proof that the owner of the property has legally obtained permission from the concerned authorities to use the land for residential purposes.
Layout approval plan sanction
The layout plan has to be sanctioned by the local development authority. If this approval has not been obtained, then the development authority has the right to demolish the building or charge penalty for unauthorized construction. Ensure that you have this document beforehand if you don’t want to face complications later.
Auction Sale Confirmation Letter
If the property has been purchased from an auction by the Local Development Authority, then you need to obtain this letter from the builder or house owner before applying for a Home Loan.
If you’re purchasing a property that was either inherited by the seller or is a settlement by the legal heirs of the property owner, then you have to demand the Release Deed before buying the property.
This certificate is issued by Municipal authorities and states that the property has been constructed according to the approved plan.
Loan/Charge/Mortgage by Builder
Ensure that the property you’re buying is free from any encumbrances and mortgages. The builder has to state this clearly in an agreement/s with the developer. The agreement entrusts all the original documents, deeds and approvals to the developer until the Apartment Owner’s Association is formed, after which the Association becomes the custodian of all the documents.
Khata Certificate and Extract (Applicable to only Bangalore)
Literally meaning an ‘Account’, Khata includes two documents – Khata Certificate and Khata Extract.
A mandatory document of proof, the Khata Certificate encloses details of property ownership and is issued by the Assistant Revenue Officer to the owner or his family members only. This certificate is a must-have to register and transfer new property. The Khata Certificate comes in handy if you need to obtain a water connection, electricity connection, trade license and building license.
Khata Extract refers to an extract from the assessment register which encloses details of any property. Details include name, property size, use of property – commercial or residential, annual value and last assessed details.
Original Khata documents are required while purchasing a property or applying for a Home Loan.
List of good-to-have property documents before applying for a Home Loan:
Issued by the village accountant, the RTC Extract is a record of details which includes the extent of land in a survey number or a sub-survey number, the list of the owners and their extent of holding, present tenant details, mortgages and charges on the property, and the land status (Inam or not). It also contains the conversion order number and date, if the specified property has been converted from agricultural to non-agricultural use. The RTC Extract is usually required while purchasing property, but it is not a mandatory document.
Mutation Register Extract
The Mutation Register Extract is another good to have document while buying property. Quite similar to the RTC Extract, the Mutation Extract can be obtained from the Village Accountant or Tahsildar. This document contains the inheritance certificate with previous owner’s details, details of the present owner, mode of acquisition of property, the extent of the property.
Detailed cost estimate/valuation report
Banks require a detailed property valuation report from a chartered engineer or architect before sanctioning a Home Loan. They fix your loan eligibility based on this valuation.
After construction of the property, the builder has to apply for the Occupancy Certificate. This certificate acts as proof that the building has been constructed according to the sanctioned plan and it is ready for occupancy.
Deed of Declaration
To confirm the transfer of ownership to the original buyer from the builder, a copy of the Deed of Declaration of the Apartment Owners Association and the bye-laws annexed to it is demanded and read to confirm. This deed should be in tandem with the Sale Deed.
Latest Electricity Bill
Electricity bills are an important proof of ownership. Make sure that you collect the latest electricity bill and payment receipt from the previous owner.
If a flat is purchased from a builder, you need the following property documents:
– Original copy of your agreement with the builder
– 7/12 extract – This is issued by the concerned land authorities giving details such as the survey numbers, area, date from which the current owner is registered as owner etc.
– Property register card, which is obtained from the City Survey Department
– N.A. permission for the land from the collector, if it’s agricultural. If the land is agricultural and is being utilized for residential/ commercial/industrial use, then such agricultural land has to be converted to non-agricultural land and a Non-Agriculture Order has to be obtained from the Collector of the district where the property is located.
– Search Report and Title Certificate – A search report and title certificate can be obtained from an advocate who will conduct a survey of the title of the property by visiting the office of the registrar. A legal opinion can avoid any legal hassles later and is mandatory to be filed with the agreement for sale.
– Development agreement between the owner of land and the builder
– Copy of order under the Urban Land Ceiling Act
– Copy of building plans sanctioned by the competent authority
– Commencement certificate granted by the Corporation
– Building completion certificate
– Latest receipts for taxes paid towards the land/property/flat to be purchased
– Partnership deed or memorandum of association of the builders firm
If a flat is purchased from a Cooperative Society, you need the following property documents:
– Original share certificate of the Society
– Allotment letter from the Society in your name
– Copy of the lease deed, if executed
– Certificate of the registration of the society
– Copy of the bye-laws of the Society
– No objection certificate from the Society
– 7/12 extract or property register card in the Society’s name
– Copy of N.A permission for the land from the collector
– Search Report and Title Certificate
– Copy of order under the Urban Land Ceiling Act
– Copy of the building plans sanctioned by a competent authority
– Commencement certificate granted by Corporation
– The latest receipts of taxes paid for the property
– Original Agreement to assign / Deed of assignment
If you are constructing on your own land, then you will need the following property documents:
– Original sale deed of land and extract of Index II
– 7/12 extract or property register card in your name
– Copy of N.A. permission for land from the collector
– Search and title report
– Copy of tax paid under the Urban Land Ceiling Act (obtained from the Commissionerate of Urban Land Ceiling and Urban Land Tax)
– Copy of the building plans sanctioned by a competent authority
– Building permission granted by the Corporation
– The latest receipts of taxes paid for your land
– Estimate of the cost of construction certified by the architect
Additional reading: Home Loan Handbook: All Questions Answered
Feel knowledgeable? We hope so. Phew! Quite a bit to take in, no? Anyway, this will do you a ton of good when you opt for a Home Loan. You have our word!