So you have zeroed in your dream home and have applied for a home loan to finance your abode. Banks mandatorily conduct property evaluation, but why? That is because it acts as a security against your home loan. This implies that if you default or are no longer able to make the repayments then the lender may sell the property to recover its amount.
So, what is it that the banks check when they evaluate your property?
Under construction property
- Stage of construction is the same as that mentioned in the payment notice given to you by the builder.
- Location of the property A Site well connected to hospital, mall, railway station or airport gets better valuation
- Quality of construction.
- Satisfactory progress of work.
- The layout of the flats and area of property is well within permissions granted by the governing authority.
- Sanction plan.
- Banks will see whether the home loan that you are applying for is a property that is in a region where they service.
Ready to move /resale property
- How well is the property maintained
- The age of the building, the older it is the less valued it will be
- Quality of Construction
- If the property is located near a market or office are, the valuation is higher
- The builder must have the requisite possession certificates for handing over of the flat.
- How is the property being used-is it vacant or put on rent or being used by the owner as well as the nature of the property – residential, industrial, commercial or agricultural – for each valuation will be different.
- If the property is in a risk zone, banks may not prefer to lend at all. Same goes for earthquake or flood prone areas.
This process is extremely crucial for both the bank and the buyer. While the bank decides on the loan limit, for the buyer it is a big confidence booster that the property is hassle free- technically and legally.
This is a very crucial stage for the buyer as gives you confidence that your property has been inspected by experts and that you are buying an asset that is legally clear and technically sound.