The process of taking a home loan can be daunting, especially if you have never applied for any loan earlier. Andignorance on your part can not only make it an unpleasant experience, but also prove to be costly. Here is a step‐by‐step guide to equip you with the right info, so you know what to expect.
From applying for a home loan to getting it involves various stages. These are:
Step 1: Application form
Step 2: Personal Discussion
Step 3: Bank’s Field Investigation
Step 4: Credit appraisal by the bank and loan sanction
Step 5: Offer Letter
Step 6: Submission of legal documents & legal check
Step 7: Technical / Valuation check
Step 8: Valuation
Step 9: Registration of property documents
Step 10: Signing of agreements and submitting post‐dated cheques
Step 11: Disbursement
Note: Documents to be submitted are –
- Proof of income: This will need to be backed up by proof such as copies of last three years’ Income Tax returns (along with copies of Computation of Income/Annual accounts, if any), Form 16/Form 16A, last three months’ salary slips, copies of the last 6 months’ statements of all your active bank accounts in which your salary/business income details are reflected, etc.
- Age proof: Copy of your school leaving certificate/Driving licence/Passport/ration card/PAN card/Election Commission’s card/etc.
- Address proof: Similar documents need to be provided to prove that you are actually staying at your current address.
- Identification proof: Same as above, but with photograph. Sometimes, the same document if it contains a photograph, the current residential address and the correct age can be the proof for all 3 things.
- Your employment details: If your company is not well‐known, then a short summary about the nature of the company, its business lines, its main customers, its competitors, number of offices, number of employees, turnover, profit, etc may be needed. Usually, the company profile that is available on the standard website of the company is enough.
Tax Benefit Information in Home Loans
Availing a home loan comes with multiple benefits. Home loans let you achieve your goal of buying a new home and make you eligible for tax benefits. These tax benefits can contribute towards your EMI flow and savings. Following are the points to calculate your tax benefits based on your loan amount:
- The home loan borrower enjoys Tax Benefits on both Interest paid & the Principal re-paid. Under Section 24(d) of Income Tax, the deduction of interest payable on the home loan is up to a maximum of Rs. 1,50,000.
- Under Section 80(c) of Income Tax, Principal amount for the repayment of loan along with other savings & investments is eligible for tax deduction up to a maximum limit of Rs. 1,00,000.