If you're preparing to take a home loan then it is important for you to know what Property Verification Against a Loan is. In this article, we've mentioned all the necessary information you need to know.
A home loan is a secured loan type that can be drawn for any purpose and has no end-use limit on the loan amount.
A loan on Property or LAP has the same features and functions as a personal loan, but with three main differences: first, you can get a larger loan amount; second, you must put any residential or commercial property you own as collateral; and finally, the loan term is longer.Both legal and technical reviews play an important role in the Property Verification Against Loan. Legal inspections make sure your property is free of legal issues. Plus, it allows you to avoid legally controversial Land Registration transactions.
On the other hand, a technical review is a key factor in finalising your home loan amount. Based on a technical assessment of the property, the team will send a detailed report to your lender, who will determine your property’s value.
What is Property Verification Against Loan?
Property verification is a process of verifying the property and its value. It is usually done by an independent agency or bank.
Banks and financial institutions inspect properties for which loans are made. Lenders will also review the property you are borrowing. A home loan is a secured loan in which the property is used as security or collateral.
Therefore, you will be required to provide the lender with original title documents (such as title deeds, government non-objection certificates, and other title documents). These title documents remain with the lender until you repay the loan in full.
The home loan appraisal process involves the approval and appraisal of the property to be purchased. This process is usually carried out by banks and non-bank financial institutions to determine the final loan amount they are happy to offer. Lenders often perform the home loan verification process themselves.
Why is Property Verification Required?
Banks ask for property verification to ensure that the information provided by you is correct and accurate. This helps in avoiding any issues later on, which may arise due to incorrect information or mistakes made during the loan process.
They also assess your creditworthiness by knowing your eligibility, your monthly and annual income, previous transactions with lenders, your work profile, and your ability to repay your home loan.
In addition to this, the lender will also check whether the property you wish to buy is in any litigation and is in good structural condition. For title document verification, the bank sends a team of experts (mostly lawyers) to verify the title documents of the property, such as NOC and title deeds, etc.
For a technical review of a property, the lender needs to verify the property’s physical health, market value, and various other structural specifications. In order to successfully validate your home loan, the property you intend to purchase must be built to all applicable state-set standards.
In a credit check, these documents are used as legal checks. This means that these documents are used to verify that there is a clear title to the property and that the home loan is being paid to the correct owner of the property for legal and legitimate reasons.
The bank will make sure that all the information provided was correct and that no mischief was involved. You can take help from the expert team at Vakilsearch to go through the process of property verification against a loan easily.
How do Banks do Property Verification Against Loans?
The property verification works on the basis of documents provided by the customer along with his application form for the loan which will be verified through various means like checking with other agencies, checking with the land registry office etc.
When you complete the property and wish to proceed with the transaction, we will initiate the property verification process; the property documents from a legal perspective (undisputed title, official approvals, etc.) and the property itself from a technical perspective (age, building structure, etc.)
The fees for the legal and technical verification of property vary. Generally, the fees for Legal Verification are ₹4000-₹5000 and technical verification is ₹3000-₹5000.
The technical and legal verification ensures the bank that the property for which the loan is being taken is legal and no unethical issues are involved.
Documents required for Property Verification Against Loan
A mortgage or loan on the property (LAP) is a secured type of loan provided by banks, NBFCs and other lenders against a security or mortgage on the property. The securities or property offered as collateral may be fully occupied, leased or vacant residential or commercial properties or commercial properties or residential or commercial properties.
You need to provide the bank with all necessary documents like title deeds, passport copies etc., which will be verified against their records. The procedure varies from bank to bank but generally, this involves visiting the branch office and filling up the form(s) required.
Here’s a checklist of documents required for the process:
- Sales Agreement.
- Non-Agricultural Order
- Copy of 7/12 Extract
- Occupancy Certificate
- Commencement Certificate
- RERA Registration
- Copy of Approved Plans
It is very important that your documents are proper and up to date. The experts go through all the documents during the verification process and you should ensure the correctness of all the information you provide. You can contact Vakilsearch and get expert help to manage your documents and help you through this process.
Conclusion
Property verification is a process of verifying the property details and documents provided by the borrower. It is done to ensure that the property details are correct and also to check whether there are any discrepancies in them. This helps in reducing the chances of fraud on the loan application as well as at the time of disbursement.
If you want to know more about the property verification process, Vakilsearch can be your best bet. They have an expert team that will help you and guide you through the entire process. All your queries and questions will be answered and they will help you with filling out the required forms and documents. As property verification is a very important part of the loan process, it is a smart decision to seek expert assistance.
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