Home Loans: List of Documents In Home Loans You Should Check

Every home loan application in India, whether it is for a new purchase or a balance transfer, begins with the same critical requirement: the list of documents, commonly known as LOD. For the lender, it is the first layer of evaluation and for the borrower, it is the first test of readiness.

The concept of the LOD is not strictly a form of letters. It is a comprehensive compilation of all the documents that prove the personal, financial, and other details of the borrower and the property. Without this file, financial institutions cannot proceed with the assessment or approval of the loan.

Definition and Function of LOD

The LOD, as defined in banking practice, is a formal checklist that initiates a home loan application. It is compiled and submitted by the applicant and reviewed by the lending institutions to determine two factors, namely the borrower’s eligibility, and the legitimacy of the property in question. Lenders regard the LOD as a non-negotiable precondition. It enables due diligence before any credit is extended. Loan approval, underwriting, disbursal all stem from what the LOD contains.

Standard Documents Typically Required

Although the LOD may vary in format with each individual bank, but most LODs across Indian lenders share a standard set of documents. These include:

• A registered Sale Deed

• Allotment or Possession Letter, as the case may be

• NOC (No Objection Certificate) from builder or housing society

• The Loan Statement of the existing lender, displaying the outstanding balance

• Prepayment Permission Letter, in the event of transfer of loan

• Valuation Report (if requested by the new lender)

• Proof of Home Insurance Coverage

• The current Property Tax Receipt issued by the municipality

Every document mentioned above has a certain role to play, to prove ownership, repay the loan, confirm the asset’s value, and borrowers’ adherence to the law.

Why LOD Matters in Loan Processing

A comprehensive LOD reduces ambiguity and delays. It provides the lender with a full view of the applicant’s credit profile and the property’s legal standing, thereby enabling faster scrutiny and quicker decisions.

The presence of a complete LOD ensures:

• Swift eligibility evaluation
  

• Fewer errors in document handling
  

• Reduced processing time
  

• Higher confidence between lender and borrower
  

In most cases, delays in loan sanction can be traced back to documentation lapses. A complete LOD circumvents that risk from the outset.

Use of LOD in Balance Transfers

The LOD is also indispensable during a home loan balance transfer, where the borrower seeks better terms from a new lender. In such cases, the incoming bank relies entirely on the LOD to assess liabilities, evaluate the asset, and determine whether the loan qualifies for a shift.

With a complete LOD, the receiving bank does not need to make repeated contact with the original lender. This accelerates the transfer and simplifies regulatory compliance.

Role of LOD in Home Loan Closure

The LOD is still applicable at the time of the loan closure. After the loan has been completely repaid and there is no outstanding due on it, all original title deeds in possession of the bank are required to be returned to the borrower.

In order to guarantee the accuracy of the transfer, the institution goes back to the LOD as a record of inheritance of all documents handed in.

The LOD ensures that all original documents are given back to the borrower and records are being "suppressed" or "lost". Borrowers should keep their original copies of LOD for their reference at the time of final closure after full repayment.

Obtaining the LOD from an Existing Lender

To request the LOD from a current lender, the borrower must:

1. Visit the concerned branch in person
   

2. Submit a formal written request, stating the reason such as a loan transfer
   

3. Include the loan account number and relevant loan tenure information
   
   Following internal checks, most banks issue the LOD within 15-20 business days. Lenders typically levy a nominal processing fee for issuing the LOD. The cost varies across institutions, but usually falls within the range of Rs 200-500.