This article was originally published in Postnoon on August 31st, 2012 http://postnoon.com/2012/08/31/paperwork-check-must/69584

My recently married cousin, Abhi, was contemplating buying a home. After putting all his savings together, he was still short of around Rs20 lakhs to buy the house that his wife and he liked. Being an engineer by education and by profession, he always found it difficult to handle financial matters. It is more a mental block than the capability to understand or deal with finances. He came to me to understand the home loan process.

Abhi: A lot of the banks advertise that the home loan will be processed, sanctioned and made available within a week or 10 days. Is it so simple?

Nicky: Abhi, that’s what they say. But you have to be realistic. It’s not so simple. You first need to get a whole lot of documents in place like your recent bank statements, salary slips and job offer letter, Form 16 issued by the company, passport sized photographs, Pan Card, Address Proof, Agreement of Sale etc. After you submit these to the bank’s sales team, they will then send it to their loan processing officer. Who will, rest assured, ask for more documents. You provide those, they will ask for something else.

Abhi: But why does this happen?

Nicky: That’s because of inadequate training to the sales team and their half hearted efforts. They do not give a complete list to begin with, to the customer. They do not check the documents properly and take it from the customer. If they did, they would know that the photo in the ID proof is not clear and hence the loan processing officer will not clear the file. Or, the amounts in the bank statements showing the down payment to the builder do not add up to at least 20% of the value of the property. Once they collect the cheque for the processing fees, their motivation to help you is lost. So they keep coming back to you and asking for more and more documents. And they will always justify by saying that the ‘regulations have changed’.

Abhi: This is de-motivating. If the process is so tiresome, why would anyone take a home loan?

Nicky: Do you have any other choice? Can you get a loan from somewhere else? Well, the answer is No. For most of us. So, whether we like it or not, we are stuck with this system. And then look at it this way, after you get the loan, you will be the owner of your dream house. So keep your cool. Patience is the key. You will get your loan.

Abhi: That’s true. How about the interest rates and the EMI?

Nicky: Ah that! Can we do it later? I have a class now…