Home is where you feel the most comfortable, safe, and peaceful, right? It is the sweet abode where you live a happy life with your loved ones and make a lifetime of memories. Being a homeowner is a big accomplishment; it gives you a sense of great joy and peace knowing that your loved ones have a safe place.
However, buying a home requires a significant investment. You may probably rely on a home loan to complete the purchase. Today, in India, many lenders, like banks, HFCs (housing finance companies) and NBFCs (non-banking financial companies), offer housing loans at attractive interest rates and with favourable terms and conditions to suit your needs.
However, to get the home loan sanctioned, you must comply with certain lender’s requirements, including the documentation process. No matter whether you choose a lender that offers the lowest home loan interest rate, they will require you to submit certain documents.
In this guide, we provide a checklist of the important documents you need to obtain a home loan.
Most lenders in India typically have a specific list of documents required for salaried individuals and self-employed professionals. The following table will give you a clear idea of the documents required for a home loan for salaried individuals and self-employed professionals.
For salaried individuals
| Document Type | List of Documents | Remark |
| Application form (duly filled and signed) | – | Mandatory |
| Identity Proof | PAN (Permanent Account Number) Card | Mandatory |
| Voter Id | Any one of these | |
| Valid Passport | ||
| Driving Licence | ||
| Aadhaar Card | ||
| Address Proof | Passport | Any one of these |
| Voter ID | ||
| Driving Licence | ||
| Aadhaar Card | ||
| Income and Other Documents | Salary slip | Mandatory |
| Form 16 | ||
| Bank statement (6 months) | ||
| Property documents | Copy of chain of documents of the property (if applicable) | Mandatory |
| Copy of the payment receipt received from the developer (if applicable) | ||
| Copy of the buyer agreement | ||
| Copy of the sale agreement (if executed) |
For self-employed individuals
| Document Type | List of Documents | Remark |
| Application form (duly filled and signed) | – | Mandatory |
| Identity Proof | PAN (Permanent Account Number) Card | Mandatory |
| Voter Id | Any one of these | |
| Valid Passport | ||
| Driving Licence | ||
| Aadhaar Card | ||
| Address Proof | Passport | Any one of these |
| Voter ID | ||
| Driving Licence | ||
| Aadhaar Card | ||
| Income and Other Documents | Mandatory | |
| Form 16 / ITR (Income Tax Returns) | ||
| Bank statement (6 months) | ||
| Property documents | Copy of chain of documents of the property (if applicable) | Mandatory |
| Copy of the payment receipt received from the developer (if applicable) | ||
| Copy of the buyer agreement | ||
| Copy of the sale agreement (if executed) |
*Please note – The list of documents listed above are only indicative, and the lender may require you to provide additional documents.
Now that you know the list of documents required for a home loan make sure that you have these documents ready before you start the application process. This will help you avoid last-minute hassles and unnecessary delays in the approval and disbursement process.
Also, since most lenders in India have an online application process, save a copy of these papers on your computer in a safe location so you can easily access them when required. The online application process helps you avoid the hassles of dealing with complicated paperwork and allows for paperless transactions.
Charges associated with home loan
When you apply for a home loan, the interest rate is undoubtedly the most important cost you must consider, as it directly impacts the EMI and your ability to repay the credit. However, the interest rate is not the only cost you incur; there are many other charges that you must pay, and knowing these costs is critical as they add up to your overall borrowing cost.
Here is a list of the common charges associated with home loans:
- Processing Fee
It is a mandatory fee that the lenders levy to meet the various administrative costs related to processing your home loan application. Although it may vary from one lender to another, it is generally a specific percentage of the loan amount you want to borrow. It can be up to 1.75% of the loan amount.
- Late Payment Charges
If you fail to make the monthly payments on time, i.e., on or before the due date, the lender will levy a late payment penalty. It can be a high amount of up to 18% of the outstanding amount.
- Foreclosure Charges
Foreclosure refers to part or full prepayment of the principal amount of the home loan before the actual tenure. As per the RBI (Reserve Bank of India) guidelines, lenders cannot levy any foreclosure charges if you have availed of the loan on a floating interest rate basis.
However, if you choose a fixed interest rate, the lender may charge a foreclosure fee. It could be up to 5% of the prepaid amount plus applicable taxes if the loan is prepaid or foreclosed within the first 12 months of the disbursement. After 12 months, the foreclosure charges could be up to 3% of the prepaid amount plus taxes as applicable.
Tax benefits on home loan
A home loan helps you get the funds you need to purchase your dream and allows you to enjoy valuable tax benefits for an extended period, i.e., throughout the loan repayment tenure. You can enjoy tax benefits of up to Rs. 1.5 Lakh in a financial year on the repayment of the home loan principal amount under Section 80C of the Indian Income Tax Act.
Additionally, you can enjoy tax benefits of up to Rs. 2 Lakh in a financial year on the repayment of the home loan interest amount under Section 24 of the Indian Income Tax Act. This deduction can help you lower your annual tax liability and enjoy valuable savings.
Conclusion
Today, getting a home loan is easier than ever before, as lenders have simple eligibility and minimal documentation requirements. Also, with an online application, the whole process is hassle-free, and if you comply with the process correctly, you can have a smooth borrowing experience.