Lending institutions such as banks and Non-Banking Financial Companies (NBFC) have made securing a home no more a dream. They do it by extending home loans to the customers who may not have enough money at their disposal to purchase a home all for once. The lending services are common with both the financial institutions (Banks and NBFC), but there are some dissimilarities in the process of sanctioning home loans. This also means a fair bit of difference in the documentation for a housing loan.
Unlike banks, NBFCs are not allowed to accept deposits from the public as they don’t have the license to do so. This exempts them from a hefty of regulations, which is also passed to the customers’ end. This translates into a less complex documentation process for a customer applying for a home loan with an NBFC. Whatever it is, let us understand the differences between the documentation process involved during availing a home loan from a bank and an NBFC.
Documents asked by Banks
1) Duly signed the Home loan application form
2) Passport size photographs of the applicant (number as asked by the lender)
3) Proof of identity (anyone)
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Passport
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Aadhaar Card
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PAN Card
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Voter’s ID Card
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Driving License
4) Age proof (anyone)
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Aadhaar Card
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PAN Card
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Passport
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Birth Certificate
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Secondary Schooling Class Marksheet
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Bank Passbook
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Driving License
5) Residential proof (anyone)
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Voter’s ID
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Ration Card
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Passport
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Bank Passbook
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Utility bills (Telephone Bill, Electricity Bill, Water Bill, Gas Bill)
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LIC Policy Receipt
6) Income documents (if asked, anyone)
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For salaried individuals
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Payslip of last 2 months
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Increment or Promotion letter
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IT returns of past 3 years
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Form 16
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Certified letter from Employer
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For self-employed individuals
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Income Tax Returns (ITR) of the last 2 years
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Balance Sheet and Profit & Loss Account Statement of the Company/Firm (duly attested by a C.A.)
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Business License Details
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The license of Professional Practice (For Doctors, Consultants, etc.)
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Registration Certificate of Establishment (For Shops, Factories, etc.)
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Proof of Business Address
7) Property Documents (could be multiple, as asked by the lender)
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NOC from Builder/Seller
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Estimate cost of construction of the house
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Registered Sale Deed, Allotment Letter or Stamped Agreement of Sale with the Builder (original document)
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Receipts of the advance payments made towards the purchase of flat (original document)
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An approved copy of the building plan (key plan/floor plan in case of purchase of flats)
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Original of the land tax paid receipt and possession certificate as issued by the revenue authority
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Payment receipt or bank account statements showing payments made to the Builder/Seller
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Occupancy Certificate (in case of ready-to-move-in properties)
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Property Tax Receipts, Utility Bills
These are the complete list of documents required to be produced to the banks while applying for a loan. However, one must confirm the specific list of documents from the bank’s website or any such source before applying for the loan.
Documents asked by NBFCs
Proof of identification, address, DOB, etc. are common documents required to apply for any kind of loan. However, a borrower is required to submit fewer documents to the NBFC as compared to the banks. The differences are particularly observed in income proof, property documents, etc., which are listed below:
For salaried individuals:
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Recent Form 16
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Passport-sized photographs of the applicant and co-applicant affixed as directed.
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KYC Documents as identity and residence proof. It could be a copy of your Aadhar Card, Voters ID, Driving License, Passport and/ or PAN Card
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Salary slips
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Bank statements
For self-employed individuals:
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KYC Documents as identity and residence proof (Aadhar Card, Ration Card, Voters ID, Driving License, Passport and/ or PAN Card)
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Passport-sized photographs
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Attested copies of MOA / AOA /Partnership papers
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Audited financial papers for the last two years
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Income Tax Returns of directors/ partners
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Bank statements (of main operating account)
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Expert qualification certificate from doctors, chartered accountants, advocates, civil engineers and architects
READ:- How to Decide which Bank Provides the Best Home Loan Rates
Home loans are easy to avail and to smoothen the process along with boosting your chances of approval, make sure that all the details filled in the application form must match with the ones in the submitted documents. Check out if there is an option given by your lender to upload the documents online and also confirm the documentation requirements before applying for a home loan.
