Home loan? Don't let banks get away without providing these things

Buying a home is on top of the list of most Indians. However, everyone has to get a loan to fund this massive purchase. So, if you are thinking of buying your dream house through a home loan, you should take a few precautions before going ahead. Since most banks have a separate policy for those who seek home loan for a first time and those going for a second house, you should seek specific clarifications from commercial bank you have approached. Some people also take loans for renovation and repairs of their existing home too. On homebuyers agenda, right at the very top, should be to make banks provide all the relevant information. All of them need to know what they are getting into to avoid any nasty surprises and if they do not have this information, they can get into trouble.   

According to RBI guidelines, there are minimum standards that banks are required to follow when they sell a home loan to any individual. 

What banks must provide homebuyers

Banks are required to provide info on:
1. The interest rate applicable
2. Fees / charges
3. Other things which affect your interest
4. Authenticated copies of all the loan documents executed by you at their cost
5. Copy each of all enclosures quoted in the loan document on request.

The same is usually furnished in the product brochure of the banks, but other things may well be hidden. The banks need to show complete transparency as it is mandatory on their part.

You should also know that a bank cannot reject your loan application without furnishing valid reason(s) for the same.

Home loan eligibility

Prior to approaching any bank for home loan, you should try to know as to how the bank will decide your home loan eligibility

The bank will assess your repayment capacity while deciding the home loan eligibility. The repayment capacity is based on your monthly disposable / surplus income, which in turn is based on factors such as total monthly income / surplus less monthly expenses. The other factors also also taken into consideration like your spouse's income, assets, liabilities, and stability of income. 

The main concern of the bank is to make sure that you comfortably repay the loan on time and ensure end use. 

What home loan taker must provide

You should provide the documents generally sought for a loan approval. Notably, a home loan seeker should have all legal documents relating to the house being bought. Banks will also ask you to submit Identity and Residence Proof, latest salary slip--authenticated by the employer and self attested for employees, Form 16 and last 6 months bank statements/ Balance Sheet, as applicable.

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You also need to submit the completed application form along with your photograph.