Unveiling the Home Loan Verification Process

A home loan is a convenient and cost-effective method to help you acquire or build your ideal home. Currently, the home loan interest rates are at their lowest. It’s crucial to understand that the application procedure extends beyond just submitting the necessary documents for a loan. The creditor will thoroughly assess your loan application before approving the requested funds. Here’s a detailed overview of the home loan verification process to provide you with comprehensive insights.

What is the Home Loan Verification Process?

The home loan verification process is essential for getting your loan application approved. After submitting the required home loan documents, the creditor checks if everything is legit. This involves looking into the property’s legal and technical details. The lender will approve the loan only if all your documents are accurate.

It is necessary to examine the borrower’s creditworthiness based on his qualifications, monthly and yearly income, work profile, previous transactions with other creditors, and whether the borrower can repay the loan. The lender will also verify whether there is any illegality in the home purchase.

How Does the Home Loan Verification Process Work in India?

To verify property documents and start the home loan verification process, the lender sends a team of legal experts to scrutinize ownership papers like NOCs and title deeds. The lender assesses the property’s physical condition, market value, and other building details for the technical check. To ensure a successful home loan verification, the property you want to purchase must comply with all government-mandated construction standards.

Documents Required for Home Loan Verification Process

Indicative list of documents

• Loan application form
• Proof of identity, like an Aadhaar card or passport
• Address verification, such as a utility bill not older than three months, or passport or Aadhaar card
• KYC documents, including PAN card and Aadhaar card
• Bank statements for the last six months
• Property documents (refer to the detailed list below)
• Passport-sized photographs of all applicants and, if applicable, guarantors
• Financial records, including balance sheets and profit & loss accounts of the business/profession, along with certified individual income tax returns for the past three years (for self-employed applicants)
• Latest salary slip for the last three months or a statement reflecting all deductions for salaried applicants

Property documents

• Original property sale agreement
• Proof of property tax payments
• Certificate confirming possession
• Authorization letter from relevant authorities
• Original No Objection Certificate (NOC) under the ULC Act 1976
• Property’s building or floor plan
• Non-Agricultural permission or order
• Comprehensive construction cost estimate
• Declaration for plot purchase, specifying the house construction deadline
• Allotment letter from society, builder, or housing board

Guide to the Home Loan Verification Process

• Post-Approval Contact: The home loan verification experts will contact you within 24 hours after loan approval for further processing.
• Document Submission: Submit scanned copies of required home loan documents.
• Background Verification: Conduct a background check to verify the authenticity of information, including residential address, employment, and bank details.
• Disbursement Initiation: Initiate the disbursement process after completing the housing loan verification.
• Property Document Signing: Sign and submit property documents.
• Make the Down Payment: Make the down payment with the percentage determined by the lender policy and your profile.
• Legal Check: Conduct a legal check of property papers, including title deeds and NOC; provide additional documents if necessary.
• Technical Property Check: Perform a technical check on the property, verifying age, construction quality, certificates, etc.
• Loan agreement Registration: Register the loan deal and sign the agreement.
• Disbursement of home loan: Disburse once all processes are complete.

Process of Getting Your Home Loan Verified

Step 1 – Compile Documents

Collect all necessary documents and obtain the loan application form from the lender.

Step 2 – Application

Fill in the home loan application and submit it to the lender with all the required documents.

Step 3 – Submission of Paperwork and Start of Verification

Submit all documents for background verification, credit history analysis, and legal/technical checks on the property.

Step 4 – Discussion of Terms and Conditions

If all the information checks are correct and the borrower is deemed eligible for the preferred home loan amount, the lender will contact him to discuss the terms and conditions.

Step 5 – Loan Agreement

After finalising the terms and conditions, the lender will provide a format for the loan agreement to the borrower. The borrower must follow state laws and read the agreement terms before signing.

Step 6 – Down Payment

Once the home loan is approved and verified, make the required down payment.

Step 7 – Disbursal of Funds

After receiving the down payment, the lender disburses the loan amount based on the property’s construction stage. The home loan application and verification process is completed with fund disbursement.

What is Legal and Technical Verification in Home Loan Processing?

The legal verification process for a home loan involves two phases: legal certification and technical verification.

Initially, the property is searched, and relevant documents are examined. The subsequent step includes preparing a title summary report and providing detailed information on each legal verification and property check conducted. It also verifies the property’s ownership. The legal verification ensures that the property is free from any legal dispute.

Examining the physical details of the property is a crucial aspect of the technical verification process. The main objective of this verification is to ascertain the property’s actual market value. An independent chartered accountant and a government-registered valuer conduct the technical verification. After thoroughly examining the property’s technical details, the examiners will furnish the assessment to the bank, allowing the bank to decide on the home loan.

Importance of Legal and Technical Verification in Home Loan Processing

The property’s legal and technical aspects are integral to the home loan evaluation process, as it significantly influences the amount that can be secured through the loan. As home loans are secured with the property as collateral, submitting original property documents is mandatory for a thorough review to ensure the property’s legal standing and technical legality.

Both legal and technical verification are crucial in the approval process for home loans. Legal verification protects against legal complexities and disputes, ensuring a smooth real estate transaction. On the other hand, technical verification helps to determine the approved home loan amount by providing the lender with a detailed report based on the property’s technical assessment. Typically, lenders grant home loans worth 75% to 90% of the total property value based on this technical evaluation.

Reasons for Legal Verification

Safety

This procedure ensures lenders that the property is secure and devoid of legal disputes or any other issues that could potentially cause problems for the lending bank.

Accurate Valuation of the Property

Estimating the home’s value is essential before granting a home loan. Issuing the loan without risk becomes possible only with the verification process.

Convenient for the Borrowers

After the legal and technical verification, banks form partnerships with builders for projects. In such scenarios, borrowers experience greater convenience as they are relieved from engaging in the legal and technical verification process. Borrowers are only required to prove their creditworthiness.

Screening for Potential Red Flags

If any issues arise during the legal verification process, the loan will likely not be processed, as it may pose a risk to the lender.

Captures the Value of the Property

The loan amount equates to the market value of the property. Therefore, a comprehensive property evaluation is provided to both parties through verification. Dealing with legal implications can be challenging and time-consuming. Being aware of these challenges helps navigate necessary processes when obtaining loans and ensures that the property is valued appropriately.

Conclusion

What is the home loan verification process?

Home loan verification is a process carried out by the bank to approve your home loan application. After you submit the required documents for the home loan, the creditor checks if everything is legit. This involves looking into the property’s legal and technical details. The lender will approve the loan only if all your documents are accurate.

How does the home loan verification process work in India?

The lender sends a team consisting of legal experts to scrutinise ownership papers like NOCs and title deeds. The lender assesses the property’s physical condition, market value, and other building details for the technical check. To ensure a successful home loan verification, the property you want to purchase must comply with all government-mandated construction standards.

Documents required for home loan verification

• Indicative list of documents including loan application form, identity and address proof, etc.
• Property documents like original property sale agreement, proof of property tax payment, etc.

Guide to the home loan verification process

• Post approval contract
• Document submission
• Background verification
• Disbursement initiation
• Property document signing
• Making the down payment
• Legal check
• Technical property check
• Loan agreement registration
• Disbursement of home loan

Process of getting your home loan verified

• Compile documents
• Application
• Submission of paperwork and start of verification
• Discussion of terms and conditions
• Loan agreement
• Downpayment
• Disbursal of funds

What is legal and technical verification in home loan processing?

The legal verification ensures that the property is free from any legal dispute. The legal verification process for a home loan involves two phases: legal certification and technical verification. Initially, the property is searched, and relevant documents are examined. Examining the physical details of the property is a crucial aspect of the technical verification process.

Importance of legal and technical verification in home loan processing

The property’s legal and technical aspects are integral to the home loan evaluation process, as it significantly influences the amount that can be secured through the loan. Both legal and technical verification are crucial in the approval process for home loans.

Reasons for legal verification

• Safety
• Accurate valuation of property
• Convenient for the borrowers
• Screening for potential red flags
• Captures the value of the property