5 Things You Need To Be Pre-Approved For A Mortgage

Before selecting your dream house, it is important to know how much mortgage amount you will be approved for. Sellers expect buyers to possess a pre-approval letter and are more eager to pursue those with ready financing. 

Potential buyers have to show documents that prove their assets and income, creditworthiness, employment, and more to be pre-approved for a mortgage.

Here are five things that a borrower needs to be pre-approved for home mortgage loans:

  1. Income Proof

Buyers need to produce their payslips and Income Tax Returns to be qualified for a pre-approved Mortgage. Individuals in government organizations or large companies come under this category for salaried individuals. They should be above 21 years of age at the time of loan commencement up to the age of 60. 

The income proof documents needed are:

  • 3 months payslip
  • 6 months pay slip/2 yrs bonus proof (in case of variable pay)
  • 6 months bank statement showing salary credits
  • 2 yrs Form 16 (or employment continuity proof)

 Professionals And Self-Employed Individuals

Doctors, engineers, dentists, Chartered accountants, architects, company secretaries, etc., are categorized as Professionals.  Mortgage loan eligibility for self-employed individuals who file income tax returns is that they should be above 21 years of age at the time of the commencement of the mortgage up to 65 years till its maturity.

  • 2 yrs ITR, Computation of Income, P&L, Balance sheet with CA seal and sign
  • For Asha HL – 1 yr ITR, Computation of Income, P&L, Balance sheet with CA seal and sign
  • Tax Audit Report (If Gross Turnover Exceeds Rs 1 Cr or Gross Receipts Exceeds 25 Lac)
  • 6 months bank statements of personal and business accounts
  • If ITR is filed without digital sign – CPC and tax paid challan
  • Business continuity proof (3 yrs for HL / 5 yrs for LAP)
  1. Proof Of Assets

The borrower needs to produce bank statements and proof that they possess assets to qualify for a mortgage loan. They also need to prove that they have the necessary down payment amount for the new property. 

  1. Good Credit

Most lenders need a good credit score to approve you for a mortgage. Lenders reserve the lowest interest rates for customers with good credit scores, and borrowers with bad credit often get higher rates.

  1. Proof Of Employment 

Lenders need to ensure that borrowers have a stable job and want to see a buyer’s payslips and even call the employer to verify salary and employment. 

Self-employed buyers need to submit paperwork regarding their business and income. Lenders will want to ensure the stability of the borrower’s income, location, business demand, the business’s financial strength, and whether it is generating sufficient income for monthly mortgage payments.

  1. Other Documentation

The lender would need some more documentation from the buyer to establish identity and address proof like Aadhar card, Pan card, Passport, Electricity bill, Gas bill, government-issued ID card, Voter card, etc.,

Bottomline

Before you start the process of buying your home, start gathering the paperwork so that the pre-approval process can be a smooth one. 

Resource: https://www.investopedia.com/financial-edge/0411/5-things-you-need-to-be-pre-approved-for-a-mortgage.aspx

By 12disruptors Admin

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