Here's How Brokers Can Help Homebuyers Prepare For A Home Loan
Homebuying can be an overwhelming process and it is the responsibility of a broker to make the buyer's journey smooth. As a broker, you could do that by hand holding and guiding the buyer across various stages of this long process. One of the most critical stages, where you as a broker could be helpful, is taking a home loan.
It is observed that a majority of homebuyers in India are unaware of the basic requirements for availing of a home loan and get upset when banks say 'NO'.
To make the deal become a reality, MakaaniQ gives brokers tips that could help them educate homebuyers about the minimum basic requirements for a home loan beforehand. Here's a ready reference for you:
Minimum down payment
Banks finance only up to 80 per cent of the property value. So, as an example, if your client is planning to buy a property worth Rs 50 lakh, they will get a home loan up to Rs 40 lakh. The remaining amount is what the client will be paying from his pocket as a down payment.
Also, the down amount does not include the cost of registration and other charges like the cost of setting up the home. It is better to inform the client about all the expenses he/she will have to take up apart from paying the property value.
Banks and home finance institutions follow criteria for sanctioning a home loan. In order to apply for a home loan, your client will require submitting the following documents:
- Completed loan application
- Three passport size photographs
- Proof of identity (photo copies of Voters ID card/ Passport/ Driving License/ IT PAN card)
- Proof of residence (photo copies of recent Telephone Bills/ Electricity Bill/ Property tax receipt/ Passport/ Voters ID card)
- Proof of business address for non-salaried individuals
- Statement of bank account/ pass book for last six months
- Signature identification from present bankers
- Personal Assets and Liabilities statement
Additional documents required for salaried persons:
- Original Salary Certificate from employer
- TDS certificate on Form 16 or copy of IT Returns for last two financial years, duly acknowledged by IT Deptt
Additional documents required for Professionals/self- employed/other income tax assesses:
- Acknowledged copies of three years income tax returns/ assessment orders
- Photocopies of challans as an evidence for payment of Advance Income Tax
If any of the above documents are missing for any reason, a home loan application remains incomplete. If you inform your client about these documents well in time, they can start arranging these documents alongside the home search process. This will save a lot of time.
The aforementioned set of documents will be applicable on co-applicant also.
Amount of EMI
Banks offer home loan amount on the basis of an applicant's net income, after factoring-in all the loans and liabilities. As a thumb rule, the amount of monthly equated monthly installment (EMI) is kept between 30-40 per cent of monthly income and that works best for both the bank as well as the buyer.
It is a good idea to help your client figure out the amount of EMI they can shell out and align their home search accordingly. There is no point in looking for homes that are beyond the set budget and EMI affordability criteria.