Everyone dreams of having a home to call their own. It could be a small house, a big house, an apartment, villa or even a hut! It’s the satisfaction of owning the four walls in which you sleep each night that matters. However, homes don’t come easy on the pocket and it takes quite some time to save a large enough nest egg to enable you to buy one. Alternatively, you could wisen up, and take a home loan instead to pay for your home, as homes are getting more expensive with every passing year. And paying back the money isn’t too difficult either as you can stretch out your repayment to the bank in easy monthly installments spread out over a decade or two.

Before settling on a bank for your home loan, you need to first shop around for a bank that gives a comparatively reasonable interest rate and low processing fees. Different banks have different protocols when it comes to disbursing home loans. However, there are a few basic documents that you must have in hand when applying for a home loan.

A checklist for these documents should include a photo ID proof, a driving license, passport, PAN card or Voters ID will do. The next document would be an address proof; electricity bill or better still, a registered Rent Agreement would do very well. An employment letter might also be required by some banks, especially if your current job is less than a year old.

The financial documents required by the bank include a 6-month bank statement from your primary bank, salary slip of the past 3 months for salaried individuals as well as proof of tax payments for the past 2 years (Form 16). For self-employed non-professionals, Income Tax return for 3 years is required plus the computation of IT returns certified by a registered chartered accountant. Most banks will also request for a separate loan processing fee check. All these are very important and requested by all banks and financial institutions as a pre-requisite for loan agreements.

For self-employed professionals, additional proofs of the existence of business, as well as office address proof, are a must. Property documents or utility bills can suffice as office address proof. To be eligible for a home loan, a self-employed professional should provide 3 years old Saral copy as well as the company Registration License. For income proof, the last 3 years Income Tax returns along with Computation of Income, Profit and Loss account, Audit report, Balance Sheet, etc, will do. Some banks might additionally ask for an Educational qualification certificate.

When taking a home loan, the collateral is usually the property in which you are using the loan to buy. Alternatively, the loan can be taken against some other asset or property. Since collateral is being used for the loan, you might wonder at the reason behind the need for income proof. After all, if there is a default in the repayment, the lender can easily take over the asset in accordance with the loan rules. But it’s not easy selling off the collateral property; hence the bank needs to have proof of a steady flow of incoming income to pay the EMIs.

The average bank takes about a week to disburse a home loan after their surveyor has gone over the property you are planning on buying, and should ideally send you periodic updates and statements as after-sales services.