PROCEDURES CARRIED OUT BEFORE GRANTING A HOME LOAN

Because of the improved home loan policies, buying a house has become easier in

recent years. Following the introduction of PMAY in India, more people are expressing

interest in becoming homeowners. The credit-linked subsidy scheme helps borrowers

to pay lower EMIs on their loans. There are several advantages of buying a home with

a home loan. However, you should be aware that not everyone is eligible for a

mortgage before applying. Banks examine some legal and technical aspects of a

property before granting a loan. In this article, we have shared details about the

various aspects that are verified by the bank before granting a home loan.

1) Verification of the applicant

The bank evaluates the repayment capacity of the borrower by gathering details about

his income status and assets. Furthermore, the concerned officer arranges a personal

meeting with the applicant and asks him series of questions in order to determine the

applicant’s intentions and repayment ability. Sometimes, the officer may verify the

witnesses.

2) Legal verification

Banks always want to sanction a loan for a property that is free of legal issues. 

Therefore, it hires an expert team to evaluate the legal aspects related to the property.

For this purpose, the bank’s team examines original property documents, such as title

deed, a seed deed, and no-objection certificates (NOCs).

The buyer should present the original documents of the property/house when the

bank’s legal team visits. And, in case of an under-construction apartment or house, the

loan applicant must present all the documentation showing that the builder has

received all the required permissions to initiate construction. It is also necessary to

show that the builder has obtained RERA certification.

If the loan applicant is purchasing a second-hand property, he/she must submit

documentation related to the property’s previous ownership.

3) Technical verification

The banks hire a team to evaluate the physical condition of the property for which the

loan is required in this process. The condition of the flat/house and the quality of its

construction are examined by the technical experts. The property’s market value is

calculated based on these factors.  This move is critical for the bank because if the

borrower fails to repay the mortgage on time, the bank will sell the property on the

open market or an auction to recover the amount of the pending loan.

Note- Banks may hire an external team to carry out the technical & legal verification

of the property. As a result, banks generally include the amount in the processing fees.

If you buy an apartment in a pre-approved project of the bank, there is no need for

technical and legal verifications. Therefore, you will face no problem in obtaining the

loan.