Are you going to apply for home loan in near future? If Yes, then this article is written exactly for you, because I am going to share with you a checklist which you should follow to make sure that your loan application process is smooth and also to increase the chances of your loan application getting approved.
We all take various kind of loans these days, be it home loan, car loan, personal loans or even credit cards. I will show you some very important checklists which if you follow; you will save yourself from various issues faced by other loan seekers.
Note that while this article is primarily written with home loan in mind, but the checklists discussed will also apply for any kind of loan.
Checklist #1 – Check your CIBIL report/Score in advance
Don’t underestimate the role of credit reports/score in loan approval process these days. The first thing the lender looks at is your credit score/report when you apply for any kind of loan (even credit card).
The moment you enquire for loan with a lender, they check your report from CIBIL or any other credit bureau like Equifax or Experian and based on the remarks on your report and your score, they either reject your loan application or forward your case for further checks.
There are many real life cases, where a person applied for a loan, and found out that it got rejected because of this credit report is messed up. It might be due to a credit card settlement he did few years back or because he was not able to make timely payments on his past loans.
Imagine a person who has already paid the booking amount for a car or a house and then he is stuck because he/she can’t get the loan approved. That’s not a situation; you would like to get into!
Checklist #2 – Make a simple Cash flow statement
If you are applying for a big loan like a home loan or a car loan, then it’s very important to understand where you stand financially. You should have very clear idea about the maximum down payment you will be able to make (and you should also try for that) and what is the realistic EMI you can pay each month.
As our wealth is scattered across various financial products like saving bank account, fixed deposits, mutual funds etc, it’s important to note it down in an excel sheet to get better clarity.
You should also list down the income and expenses details, so that you can get an idea about how much you save each month. Your surplus each month is very important criteria used in calculating your loan eligibility by the lender.
Checklist #3 – Increase your home loan eligibility
When most of the buy a house, they wonder how big house they will be able to afford? Just because they have high salary, they think that they will get a big loan, which most of the times is true, if you don’t have any existing loans.
But then a lot of people have several small loans running like a personal loan or a bike loan or any other consumer loans, and these small loans come in the way of your loan eligibility because they show up in your “pending loans” or “Existing EMI” list.
So one the actions you should take is to close off any small loans you have, because they will increase your “surplus” as the EMI will get stopped, and also you will have one less commitment to take care of and lender likes that.
Checklist #4 – Arrange all documents required for home loan
Some background preparations on the documentation front, can help you save last minute hassles and running around. I have often seen many people running around, for ITR proofs and other documents because they didn’t plan well in advance. Below are various documents which might be required for your home loan documentation purpose.
It’s a good idea to prepare a file and arrange all these documents well in advance. These documents are keeping in mind a salaried resident Indian.
KYC related Documents
- 2-3 Passport Size photos of applicant and co-applicant
- Identity proof like PAN or Voter ID card, Passport, Aadhar card
- Address proof like Electricity bill, Telephone bill, Employer Certificate, Aadhaar Card
Income & Employment Related Documents
- Past 3 months salary slips
- 3 yrs ITR (Income tax Returns)
- Latest 6 months bank statement attested by the bank in original
- Latest Form 16 for 2/3 yrs
- Proofs of all savings like FD’s, mutual funds, gold etc (for down payment)
- All ongoing loan account statement for past 6-12 months
- Relieving/Experience letter of previous company if current employment is less than 2 yrs old
Property Related Documents
- Original copy for Sale Deed or Agreement to Sale
- 7/12 extract
- Commencement Certificate
- NA certificate
- Search and Title Report
- Building Completion Certificate (if available)
- Latest Tax receipts
- Development Agreement
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