Getting housing finance isn’t just a few steps to cover. One needs to research a lot before requesting a lender for a home loan, which isn’t even the ultimate end. Upon getting the request, the lender also considers a lot many factors, including the creditworthiness of the borrower. For that matter, lending institutions also use a wide array of risk assessment tools. These tools are crucial to the processing and approval of housing finance. In some cases, such tools even go against the borrowers and lead to rejection due to various legal and technical aspects.
Be at ease! We will highlight all the legal and technical aspects considered by lending institutions to approve property finance. Let’s dive in.
LEGAL VERIFICATION OF THE HOUSE
As the lending institutions get the request, they begin to process the loan application. The first thing they look into is whether you are free from legal disputes or not. Hence, they send a team of experts to examine and ascertain the documents of the property for legal home loan verification. These documents generally encompass non-objection certificates (NOCs), other ownership papers, and title deeds. These experts usually include a group of certified lawyers who undertake the inspection process.
In the case of an under-construction house, your relevant documents might include a commencement certificate, encumbrance certificate (EC), occupancy certificate, and NOCs. Here, EC indicates that the house is free from legal contests and pending dues. Moreover, you can also be asked to present a builder-buyer agreement and paperwork proving the relevancy and legal authenticity of the builder.
Having done that, the legal team prepares and sends the report of examination to the lending institution, stating the issues with the property.
TECHNICAL VERIFICATION OF THE PROPERTY
The technical assessment revolves around the construction cost, health, and value. A team of technical experts is prepared and sent out to evaluate the physical health, building specification, and market value of the desired property. Aside from that, the team also examine the cost of raw materials procured, labor cost, and every else regarding the construction. The experts also check if the building adheres to all the construction norms during the process of technical housing finance verification.
THE IMPORTANCE OF VERIFICATION
Both technical and legal aspects play a vital role in the verification process. They have a huge say in whether to approve the loan request or not. The legal inspection helps the lender check that the concerned property is not caught up in any legal complexities. This way, they can stay steer clear of any legally disputed realty deal.
While on the other hand, the technical inspection is about deciding the final loan amount. This deciding factor is used when the lender is fine with the request but is wary of the amount he should be lending. On the basis of this assessment, the technical team prepares a report and sends it to the lending institution to help decide the value of the property. Generally, they decide to lend finance worth 75%-90% of the property value.
Final Words
Now you know how important it is to keep all your legal and technical aspects clean. Thus, get all the necessary documents ready before applying for the loan. You would want every document to be there before the lender initiates the verification and valuation process. Ultimately, you can rest assured that all your necessary documents are ready and the property you are looking forward to buying is legally and technically sound.
Regardless, finding a reliable housing finance provider can be a tedious job. But with a little homework and research, you will be able to settle with the aptest institution like Mission Loans.
