17 AUGUST, 2022

Whether it is a ready-to-move apartment or a villa on the city's outskirts, everyone dreams of having their own abode where they can spend quality time with others. The past few years have witnessed increased demand for high-end properties. From luxurious sea-facing apartments in high rises to quaint villas, there are now many options.

But the main problem arises at the time of purchasing the property. Apartments are costly, and buying one’s dream house can sometimes become challenging. That is why the buyer needs to plan for the future or settle for a property that is nowhere near their liking. This is where the concept of home loans comes into play. Thanks to this credit option, it is now possible for everyone to acquire the house they have envisioned living in.

Eligibility criteria for a home loan of a salaried person

The applicants must understand the eligibility criteria before checking the property documents required for home loan. If one of the requirements has been missed, it will be difficult to apply for the credit. So, here are the common eligibility criteria for home loans.

  1. The person needs to be a minimum of 18 years old and maximum of 60 years old.
  2. Banks or lending companies may set a minimum net income. For example, if the person resides in a metro city, the minimum monthly income should be INR 20,000. On the other hand, if the current residence is in any other city, the minimum salary can be a little less.
  3. There are certain educational qualifications. For example, graduation may be the minimum qualification required for the home loan if the employment is with any partnership firm or private limited company.
  4. Salaried employees should have a minimum work experience of one year overall. They should have spent around six months in their current company.

 

Documents to submit for the home loan for a salaried person

When taking any loan, appropriate documents should be submitted so that the loan request gets approved. Similarly, when taking a home loan, it is necessary to gather all the required documents and certificates, and submit them with the application for further processing. The section below will discuss general and property documents required for home loans.

General documents required for home loan

  1. Identity and residence proof like Aadhar card, pan card, birth certificate, electricity bill, voter card, passport, etc.
  2. Document with a verified signature of the applicant
  • Bank statement for the last six months showing financial transactions
  1. Statement of liabilities and all personal assets of the applicant
  2. A detailed collection of property documents
  3. Salary certificates from the current employer
  • Form 16 and income tax return files for the last two consecutive financial years
  • Age proof

Property documents required for home loan

  1. Deed of sale, share certificate, or sale agreement
  2. All the receipts containing tax details that have been paid till now for both the building and the land
  • Verified certification of property possession
  1. A certified blueprint or sketch of the property location from any revenue authority
  2. Allotment letter in the applicant's name issued by the housing board or private builder
  3. A certificate of non-encumbrance for the past 12 years or 30 years
  • Certificate of possession and land tax payment receipt verified and issued by any revenue authority
  • Approved and verified floor plan of the building after purchase
  1. NOC certificate issued under the 1976 ULC act
  2. If agricultural land is converted into residential land, a relative order document will be required
  3. Valuation report of the concerned property from the empanelled valuer
  • Power of attorney document

Is it worth taking a home loan for a salaried employee?

Often people wonder if there is any advantage to taking home loans when they have to pay a high housing loan interest later on. However, nowadays, there are a lot of relaxations on home loans. So, buyers need not bear high EMIs year after year.

Here are some advantages of taking a home loan:

  1. First and foremost, according to section 80C of the Indian Income Tax Act, buyers will get tax exemptions on home loans. The maximum deduction one can claim under this section for one financial year is INR 1.5 lakhs. However, remember that the deductions can only be claimed if the house is completed.
  2. One of the major benefits of taking a floating rate home loan is the absence of prepayment penalty charges. Therefore, whenever one has extra savings in hand after receiving salary, they can use that cash to pay off a certain amount of the home loan principal to reduce their burden.
  3. The home loan can be transferred to another lender who offers a lower interest rate than the current lender.
  4. This is an almost instantaneous credit one can get to buy their dream house. No restriction is levied on the type of house that one wants to buy or the location.
  5. As the prepayment term is quite high, almost up to 30 years, one can reduce their EMI amount that needs to be paid per month. Salaried employees can submit documents for further extensions and reduce the monthly debt they have to pay.
Conclusion

Getting a home loan is no rocket science, but it is necessary to submit all the correct documents on time to prevent any disapproval of the application. Salaried people don't have to submit many documents concerning their income and its validity. However, it is necessary to ensure that the credit score is healthy and the property documents are correct. Rest assured, the loan for one’s dream house will be accepted, and the credit will also be available sooner than expected.

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Disclaimer: This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank make no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.

Disclaimer: This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank make no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.