Most home buyers do avail loans to buy their dream homes. In case you are buying a resale property, just follow these simple steps:
Here are the requirements of this section:
The very first step should be to ascertain the amount of home loan you are eligible to avail. There are plenty of home loan EMI calculators but roughly one has to pay an EMI of Rs 1000/- per month for every lakh that is borrowed for a 15-year loan tenure. The entire loan processing may take about two weeks. If the property value is more than ₹ 20 lakhs, you may avail a maximum loan equivalent to 80%. Stamp Duty & Registration cost (about 5.6% of the sale value) is not included in this and usually is borne by you.
Most banks have a website where you can fill up a small form and the appropriate loan agent will reach out to you. You may also visit the nearest branch of the bank from which you wish to avail your loan. The bank’s loan agents will provide the necessary help.
The bank pre-approves a certain loan amount after thoroughly evaluating your credit history / CIBIL Score and your income and expense data. Co-applicants, if any, need to be added here. The bank will issue the loan sanction pre-approval letter to you. The letter will be valid for a certain period of time that will be clearly mentioned in the letter itself, along with the terms and conditions of the loan. Some banks may charge a small processing fee for pre-approving a loan.
Once you have selected your dream home, ensure that you and the seller have mutually agreed on a final price and all terms of the transaction. You can consult with an experienced lawyer to help you draft the sale agreement. An executed sale agreement between you and the seller is required before initiating the home loan process.
Pre-existing home loan case: The seller needs to get a NOC from the bank before executing the sale agreement.
Banks require these basic documents from you (and your co-applicants) along with the Loan Application forms before starting your loan processing. These are - Passport size photographs, Proof of identify (copies of Voters ID card/ Passport/ Driving licence/ PAN card), Proof of residence (copies of recent Telephone Bills/ Electricity Bill) and Statement of Bank Account for last six months, original salary certificate from employer and copy of IT Returns for last two financial years. Co-Applicants, if any, must also submit these documents.
Fill the Home Loan Application & Submit all the above personal documents and the executed sale agreement. There is a small processing fee, which needs to be paid along with the loan application.
You will need to submit photocopies of all the property documents mainly - previous sale deeds, mother deeds, tax paid receipts, latest encumbrance certificates, RTCs, building approval plans, Khata certificate and Khata extract.
The bank will conduct independent Legal Verification of the property through a panel lawyer. The lawyer will issue Legal Verification Report to the bank directly, which will not be shared with you.
For technical assessment, the bank will appoint a valuer to fix the fair market value of the property. The objective of this exercise is to ensure that an appropriate loan amount is approved against the property.
Pre-existing home loan case:The seller has to get a foreclosure letter from his loan bank, which should mention the outstanding loan amount and the details of the original documents in their possession. The seller needs to provide a certified copy of this sale deed along with all other property documents mentioned above.
After complete verification, the bank will sanction the home loan against the property. Now you will have to sign the home loan agreement. The home loan agreement will contain all terms and conditions related to the Home Loan. You will also have to submit the original executed sale agreement, ECS along with cheques, and other undertakings as per the requirement of the bank to complete the home loan process.
Pre-existing home loan case: The seller will be asked to become a guarantor for the new loan till the transaction is complete. The buyer’s bank will release a Demand Draft (DD) in favour of the seller’s bank for the outstanding amount. The seller has to deposit the same in his bank, get a No Due Certificate from them. This needs to be submitted to the buyer’s bank.
Now you will need the assistance of a property lawyer to draft the sale deed or deed of conveyance, which needs to be registered at the appropriate sub registrar’s office. This is essentially the ownership transfer documents, which will make you the “absolute owner” of the property. Registration of this sale deed is commonly known as “property registration”.
After the Home Loan Agreement is signed, you may finalize the date of property registration in coordination with the seller. The bank will provide a photocopy of the DD to you one day prior to the registration. Once the property is registered, the seller and you will have to visit the banks with all original documents, including the latest registered sale deed. The banks will retain the complete set of original documents in their custody (the latest registered sale deed and including the ones with the seller) and will hand over the DD/banker’s cheque made in the name of the seller. Some banks, however, send their own bank personnel on the day of the registration, along with the DD, to the sub-registrar’s office, to the originals once the property registration is complete. It is advisable to keep a certified copy of the sale deed for your reference.
Pre-existing home loan case:The buyer’s bank will issue any balance amount to seller (if applicable) and release him from the guarantorship.