Understanding Legal and Technical Verification in Home Loans

Applying for a home loan can be a major milestone on the path to owning your dream home. However, it is not just about getting approval or finding the right loan interest rate. Banks and financial institutions carry out legal and technical verification to protect both themselves and you, the buyer. This process ensures that the property is legally sound and meets technical standards.

Legal and technical verifications for a home loan are designed to safeguard your investment by confirming property details, ownership, and physical condition. Let us break down what these verifications mean, why they matter, and the steps involved.

What is legal verification of property?

Legal verification checks if the property’s documents and ownership records are in order. When you apply for a home loan, the lender will require specific legal documents to assess whether the property title is clear and if there are any disputes associated with it.

Importance of legal verification in home loans

A home loan is a substantial financial commitment. Banks want to ensure they are lending money for a secure property, so legal verification helps prevent complications. For homebuyers, legal verification provides peace of mind, ensuring you will not face ownership challenges or future legal issues.

Key legal documents for home loan

Banks and financial institutions will usually request these essential legal documents for home loan approval:

• Sale deed: This is the main document showing that the property is legally transferred to the buyer. The bank checks it to confirm clear ownership.
• Mother deed: It traces the history of ownership of the property. A clear chain of ownership ensures no past issues might impact the buyer’s claim.
• Encumbrance certificate (EC): An EC ensures that the property has no legal liabilities like unpaid loans or disputes. Lenders want to see a property free from encumbrances for a clean transfer.
• Approved building plan: To avoid any potential demolition risks, the building plan approval ensures that the property complies with local authority regulations. Unauthorised constructions or building violations can result in fines or building demolition.
• Property tax receipts: Paying property taxes regularly is essential. The bank checks tax receipts to confirm that there are no outstanding dues on the property.
• Possession certificate: A possession certificate shows that the property has been handed over to the buyer legally. It is essential, especially for new constructions or recently purchased properties.

Additional read: Documents required for home loan

How is legal verification done?

The bank usually engages a panel of legal experts or lawyers who review these documents carefully. They will check for completeness, confirm property ownership, and assess if there are any claims or liabilities. Once satisfied, they give a legal clearance, indicating the property is suitable for financing.

What is technical verification in home loans?

Technical verification, unlike legal verification, involves the physical aspects of the property. This verification assesses if the property is structurally sound and matches the description and documents provided.

Importance of technical verification in home loans

Technical verification helps both the lender and borrower understand the property’s true condition. It confirms that the property holds the value stated, meets safety standards, and is in a desirable location for resale or future investments. The bank can lend confidently, knowing the property is secure, and you get a fair valuation and structural assurance for your new home.

Key aspects of technical verification

Technical verification of a home loan typically includes the following checks:

• Property size and dimensions: The bank will verify the area and dimensions of the property against the documentation provided. This ensures there is no mismatch that could impact the loan.
• Structural soundness: Structural soundness is vital for the property's long-term durability. An engineer will inspect the building to ensure it is built to last and meets safety guidelines.
• Property location and surroundings: Location plays a huge role in property valuation. The bank’s assessment includes examining the property’s neighbourhood, proximity to amenities, road access, and local developments.
• Property age: The bank checks the age of the property to determine its durability and estimated value over time. Older properties might require higher maintenance, which could impact resale value.
• Market valuation: A property’s market value directly influences the loan amount. The bank will conduct a market assessment to determine if the property’s value aligns with your requested loan amount.
• Verification of builder credentials: If the property is part of a new construction, the bank may review the builder’s reputation and past project records. This helps ensure the builder follows the norms and has a history of timely project completions.

Steps in technical verification

1. Site visit: The bank sends a technical officer or property expert to the site. This visit confirms the property location, structure, and overall condition.

2. Verification report: After the inspection, the bank's technical expert prepares a report detailing the property’s condition, value, and potential risks. This report is essential for final loan approval and determining the loan amount.

3. Final approval: If the property passes both legal and technical verifications, it receives final loan approval. This means that the bank is confident in financing your property purchase.

Why legal and technical verification is important

Legal and technical verifications are crucial steps that protect both the lender and the borrower. For banks, it is about reducing risks associated with lending, while for borrowers, these verifications provide confidence that the property is secure. The verification process also helps determine the loan amount based on a fair assessment of the property’s value and condition.

How these verifications impact loan processing time

Legal and technical verifications can take some time, depending on how quickly documents are made available and the complexity of the property’s history. This process is often complete within a few weeks, but can be faster if all documents are in order and the property is in good condition. Being proactive about gathering legal documents and arranging site visits can help speed things along.

Tips to speed up the verification process

• Organise documents early: Gather all the required legal documents before starting your loan application to avoid delays.
• Ensure property compliance: Verify that the property has an approved building plan and is free from encumbrances to streamline the legal check.
• Choose a reputable lender: Reputed lenders often have faster processes for legal and technical verification, making the overall loan application smoother.

Getting a home loan with Bajaj Housing Finance

If you are looking for a home loan with flexible repayment options, affordable interest rates, and quick approvals, consider Bajaj Housing Finance Home Loan.

Here are some benefits of choosing a Bajaj Housing Finance Home Loan:

1. High loan amount: Turn your dream home into a reality with a high-value loan amount of up to Rs. 15 crore*.

2. Competitive interest rates: Benefit from attractive interest rates starting at just 8.25%* p.a, making your EMIs as low as Rs. 741/lakh*.

3. Quick approval: Enjoy quick loan approvals within 48 Hours*, sometimes even sooner.

4. Flexible tenure: Repay comfortably over a long tenure of up to 32 years, making EMIs easier to manage.

5. Hassle-free application: Save time with our seamless process and doorstep document collection service.

You can also opt for our home loan balance transfer facility to switch your existing loan to Bajaj Housing Finance for better interest rates and terms, helping you save on overall interest and repay faster.