How Does Home Loan Verification Process Works in India?
17 Jun 2022
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A home loan provides easy and affordable financing for you to purchase or construct the home of your dreams. The good news is that home loan interest rates are currently at an all-time low. Thus, if you are planning to apply for a home loan, now might be the right time to do so. However, do remember that your application process does not end after you submit the documents required for home loan financing. The lender must also verify your loan request before sanctioning the requested amount. To help you gain a better understanding, here is everything you need to know about the home loan verification process.
The home loan verification process
The home loan verification process is one of the most crucial stages of the loan approval process. After you have submitted the documents required for a home loan application, the lender verifies the authenticity of the information by conducting various background checks. This also includes the legal and technical verification of property. The lender will only sanction the loan if all the documents submitted by you are correct.
The lender will also assess your creditworthiness by understanding your qualifications, monthly and yearly income, previous transactions with the lender, work profile, and your ability to repay the home loan. Furthermore, the lender will also check if the property you wish to buy is stuck in any legal disputes and inspect whether it has good structural health. For the property document verification, the lender will send a team of experts, mostly lawyers, to check the ownership documents of the property such as, NOCs, and title deeds, among others. For the technical verification of the property, the lender would have to review the property’s physical health, its market value, and various other building specifications. To successfully verify your home loan, the property you wish to buy must be constructed in accordance with all prevailing government-specified norms.
What are the documents required for the home loan verification process?
The list of documents required for the home loan application process usually varies depending on the type of property you wish to purchase and the lender from whom you wish to take the loan. Hence, it is better to confer with the loan provider about the documents required for the loan approval before starting your application process.
Below is the indicative list of documents-
- Loan application form
- An identity proof, such as Aadhaar card, or passport
- Your address proof, such as a utilities bill that is not more than three months old, or passport or Aadhaar card
- Your KYC documents such as PAN card and Aadhaar card
- Bank account statements of the last six months
- Property documents (detailed list provided below)
- Passport size photographs of all applicants and guarantors, if any.
- Balance sheets and profit & loss accounts of the business/profession along with copies of individual income-tax returns for the last three years, certified by a chartered accountant. (for self-employed applicants)
- Latest salary slip (for 3 months) / statement showing all deductions in case of salaried applicants
Property documents required for the home loan verification process
- The original property sale agreement
- Receipts of payment of the property tax
- Certificate of possession
- Permission letter from the concerned authorities
- Original NOC issued under the ULC Act 1976
- Building plan or floor plan of the property
- Non-Agricultural permission or order
- Detailed estimation of the construction cost
- If you are purchasing a plot, you would need to submit a declaration specifying the date by which you will construct a house
- Allotment letter issued by the society, builder, or the housing board
What is the process of getting your home loan verified?
Here are the steps involved in the process of getting your home loan verified and sanctioned:
• Step 1 – Compile documents
Compile all the required documents and procure the loan application form from the lender.
• Step 2 - Application
Fill out the home loan application form and submit the same along with all the required documents to the lender.
• Step 3 – Submission of paperwork and start of verification
Once you submit all the documents, the lender will perform background verification and analyse your credit history. The lender would also have to run legal and technical checks on the property you wish to purchase.
• Step 4 – Discussion of terms and conditions
If all the information you provide checks out and you are deemed eligible to procure the home loan of your preferred amount, the lender will contact you to discuss the terms and conditions of the loan.
• Step 5 - Loan agreement
Once you and the bank have finalised the terms and conditions of the loan, the lender will provide you with a format to draw up a loan agreement. Do remember to follow the state law when creating the loan agreement. Also, ensure that you read the agreement terms and conditions carefully before signing.
• Step 6 – Down payment
Once your home loan has been approved and verified, you will be required to make the down payment that the lender requires.
• Step 7 – Disbursal of funds
After the lender receives your down payment, depending on the terms and conditions of the loan, the loan amount is disbursed. The disbursed amount depends on the construction stage of the property. Implying, if the property is fully constructed, the lender would most likely disburse the whole amount in one go. However, if the property is partially constructed, the lender would also disburse only a portion of the total loan amount.
The process of your home loan application and verification now stands completed with the disbursal of the funds.
Home loans made easy with Bank of Baroda
The Bank of Baroda home loan verification process is simple and seamless. You can visit Bank of Baroda’s website and get all the details you need to successfully start and complete your home loan application process. The website has been intuitively designed, thus making it extremely easy even for first-time loan applicants to independently complete the home loan application process.
Furthermore, you can also download the loan application forms directly from the Bank of Baroda’s website. You can also make use of the home loan EMI calculator present on the website to calculate your monthly EMIs before you even start your loan application process. Bank of Baroda is transparent in its lending processes and does not levy any hidden charges on its loans.
So, go ahead and explore our range of home loans and pick the one that suits your needs the best. Apart from a regular home loan, we also offer other forms of financing such as a home loan takeover scheme, top up loan, and home improvement loan.
If you need any more assistance, do call us up on 1800 5700 or drop in at a Bank of Baroda branch nearest to you.
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The contents of this article/infographic/picture/video are meant solely for information purposes and do not necessarily reflect the views of Bank of Baroda. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Bank of Baroda and/ or its Affiliates and its subsidiaries make no representation as to the accuracy; completeness or reliability of any information contained herein or otherwise provided and hereby disclaim any liability with regard to the same. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject Bank of Baroda or its affiliates to any licensing or registration requirements. Bank of Baroda shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.
A Complete Guide to Personal Loan
A personal loan does not require the borrower to provide collateral and so it is an unsecured loan. The purpose or intention of a personal loan is to fund immediate financial contingencies. It could be for business capital, marriage, medical expenses or even foreign trips, though the end use of the capital really depends on the borrower, as long as it is for a legitimate financial need.
Eligibility for a personal loan?
Since these loans are unsecured- at what rate of interest you will get the loan and how much, whether or not you will get the loan-depend on the credit quality of the borrower. If you have good creditworthiness, you are likely to get the loan at an attractive rate of interest. If you have been a long time customer with the bank, with sound track record of financial discipline, you may also get a pre-approved personal loan sanction.
Bank of Baroda lists the following types of employees/self-employed individuals who are eligible for personal loans.
Employees of Central / State Govt. / Autonomous Bodies/ Public / Joint Sector Undertakings, Public Limited Co. / MNCs & Educational Institutions – with minimum continuous service for 1 year
Employees of Proprietorship, Partnership firms, Private Limited companies, Trust - with minimum continuous service for 1 year
Insurance Agents- doing business for minimum last -2- years
Self Employed Professionals (Doctor, Engineer, Architect, Interior Designers, Tech. and Management Consultants, Practicing Company secretaries etc) -- with minimum 1 year stable business.
Self Employed Business persons - with minimum 1 year stable business.
Some of the benefits of a personal loan are
Urgent financial requirement
If there is an immediate need for money, personal loans are the best option. They are considered better than credit cards or loans from family members or unorganized lenders, since the rate of interest is reasonable and the lender is a credible organization. Credit cards come with strict credit limits, which is not the case with personal loans. Funds taken from the bank as personal loan also resolve the issue of certain vendors not accepting payment through credit cards.
Breathing time for repayment
Also, the credit card bills need to be paid off by the due date which generally falls in the next month whereas you get some breather in repaying a personal loan EMI over a period of time, generally ranging from 3-4 years.
Flexibility of use
Funds from a personal loan are flexible in the way you use them. They can be used for several purposes- home renovation, travel, wedding and medical expenses or for any other purpose as per one’s personal obligations..
Loan amount
The loan amount you can borrow under a personal loan is also significant. For example, with Bank of Baroda offer personal loan amounts based on the eligibility of applicants
Confidential
Personal loans may also be private loans since these loans are often used to meet cash requirements or personal contingencies and thus kept private to a great extent.
Flexible repayment structure
These loans are generally of the nature of short to medium term loans and come with a flexible repayment structure.
Easy to get
For example, Bank of Baroda is popular for personal loans that are quick to get, fast processing, minimal documentation required and offered at attractive rate of interests. Most salaried persons, self-employed and professionals can apply for these personal loans.
Smart Ways to Calculate EMI on Personal Loan
A personal loan does not require the borrower to provide collateral and so it is an unsecured loan. Since these are unsecured loans, the rate of interest on these loans are believed to be quite higher than all other types of loans. The purpose or intention of a personal loan is to fund immediate financial contingencies. It could either be for business capital, marriage, education or even foreign trips, though the end use of the loan really depends on the borrower, as long as it is for a legitimate financial need.
Before you apply for a Personal Loan, you may want to get down to the basics, to shop for the best offers on personal loans in the market. Among the most popular ones is the Bank of Baroda’s Personal loan product which apart from having the pedigree of belonging to one of the oldest and largest Indian banks, comes replete with some amazing features like flexible repayment options, affordable EMIs (Equated Monthly Instalments) that sit easy on your pocket and sizable loan amount among others in the category of personal loans.
Calculating the EMI on personal loans
The EMI calculations mainly rely on three variables- the loan term or the tenure of the loan, the loan value and the rate of interest. The rate of interest is one of the aspects that comes determined by the bank.
Calculating using the PMT formula
This is a longer, tedious and round about approach to calculating the EMI on your personal loan. Here, you can run the PMT formula on Microsoft Excel to calculate the EMI, where
PMT is your EMI,
NPER or number of periods is the total number of payments for the loan
PV is the loan value or the principal
Rate is the rate of interest/12
The formula is
PMT (Rate, NPER, pv).
You can keep trying the formula for various combinations and then choose the one with the lowest EMI, though this is a roundabout approach that could be prone to human error.
Online EMI Calculator
Or a far easier option to calculate the affordable EMI, is using, for example, Bank of Baroda’s online personal loan EMI calculator.
Here, you will find a slider on the range of each of the three basic variables on your screen- the loan amount you are likely to need, the tenure or the repayment period of the loan that suits your finances and the rate of interest.
Now, the rate of interest is what you get from the bank, while the other two aspects, i.e., the loan amount and the tenure of the loan are the ones you can play around with here.
When you place the cursor on a particular value of the loan term, rate of interest and loan amount, the calculator throws up a monthly payment value, which is your EMI. You can move the cursor horizontally along the range provided to pick the various values.
Here’s why using a Bank of Baroda personal loan EMI calculator works.
If EMI is too high
You can pick a longer loan term or
You can make the loan amount smaller.
If you find the EMI is affordable or even lower than ideal then you can plan to repay faster by either
Taking a larger loan value or
A shorter loan term.
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