Home loan approval involves many steps. One of the steps they undertake before approving the loan is they do a legal and technical verification of the property. Read on to know its importance. The lender carries out several processes before issuing the sanction letter. One of the critical procedures involved during the review is the legal and technical verification of property.
The lenders, irrespective of the type of home loan scheme you apply for, determine the eligible loan amount based on the assessment of the property. It is in the interest of the lender and the borrower to ensure that the property is technically sound and has no legal issues.
Before approving the loan, the lenders ask for the property-related documents like the NOCs (No Objection Certificates) acquired by the builder from the concerned local civic authorities, the approved project plan, title deeds, and ownership papers. The lenders keep these documents in their custody until you repay the loan in full and close the loan account.
During the credit appraisal, the lenders usually appoint a team of legal experts to verify the authenticity of the documents you submit. If the experts find any discrepancy in the documents, there is a high probability that your loan application would be rejected. No lender would ever want to fund a property that is involved in a legal dispute.
As a prospective homeowner and a home loan borrower, you must not see the legal and technical verification process as a hindrance; you must see it as a blessing. This is because if the lender approves the loan, the property is by large free of any encumbrances and runs a low risk of a legal dispute.
Apart from verifying the documents of the property, the lenders also do a technical evaluation of the property. This includes assessing the structural stability of the building and checking if the property is built as per the safety norms. The experts also check the built-up area of the flat, the age of the property, the quality of materials used for construction, the time taken to complete the project, etc.
Usually, most lenders have a list of pre-approved properties and it is recommended that you buy a flat in the approved project. This not only ensures the safety and security of the property but also it helps you complete the loan appraisal and approval faster.
If you are applying for a top-up loan or wish to transfer the loan to a new lender, the technical evaluation of the property plays a vital role in estimating the market value of the property. The lenders will assess the property thoroughly before determining the loan amount to be sanctioned.
So, while the lenders carry the evaluation process of the property, be patient. It will save you from the legal hassles in the future.