How To Get Home Loans From Banks?

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Home finance enables you to buy your dream home or renovate your existing home anyway you want. However, many people are unaware about the process of getting home loans from banks and thus end up saving the amount all their lives only to find out that the prices have gone up further.

In this article, we tried to make it easy for our readers to apply for home loans by listing down not only the banks that give home loans in Pakistan, but also the process of getting home loans, documents required, and eligibility criteria.

Islamic Banks That Provide Home Loan

Following is the list of Islamic Banks in Pakistan that offer home loans or home finances:

  • Dubai Islamic Bank
  • Bank Alfalah Islamic
  • MCB Islamic Banking
  • UBL Islamic Banking
  • HBL Islamic Banking
  • Bank Al Habib Islamic Banking

Conventional Banks That Provide Home Loan

Following is the list of conventional banks that offer home loans:

  • HBL bank
  • United Bank Limited
  • Standard Chartered
  • Soneri Bank
  • Faysal Bank

Eligibility Criteria To Apply For Home Loan

Eligibility criteria for home loans varies from bank to bank, but generally all banks assess the eligibility of an applicant based on certain parameters. We have compiled a general eligibility criteria that most banks follow to help you determine if you can apply for a home loan or not.

An applicant will be considered eligible for a home loan if:

  • The applicant is a self-employed professional, a businessman or a salaried individual.
  • Minimum monthly income of an applicant (salaried person) is between Rs. 40,000 to Rs. 50,000.
  • Age of the applicant is between 23 to 65 years.
  • The applicant is a Pakistani citizen.

This is the basic eligibility criteria, however banks will also take into account your credit history and other factors before granting you a home loan. So before selecting the bank to apply for a home loan, you should properly research all the requirements of that particular bank.

Required Documents

The most common documents required to apply for a home loan are:

Personal Identification Documents

  • Photocopy of applicant’s CNIC
  • Photocopy of co-applicant’s CNIC (if applicable)
  • Two recent passport-size photographs of applicant (and co-applicant if applicable)
  • Photocopies of last paid utility bills (if any)
  • Photocopies of CNICs of legal heirs
  • Copy of credit card bills and any other credit facilities (if applicable)
  • Copy of degree / certificate (if any)
  • Copy of rent agreement (if any)

Income Identification Documents

For Salaried Person

  • Employment letter including current salary, date of joining and present job title
  • Certified or original salary slips of last three months
  • Previous proof of employment (if any)
  • Last 12 months bank statement of the salary account

For Businessman / Self Employed

  • Tax returns or bank statements of last 3 years
  • Copy of National Tax Number (NTN) Certificate & last 3 years tax returns
  • Copy of partnership agreement (if any)

Process To Get Home Loan

The process to apply for a home loan is not that difficult, just gather all the required documents and choose your bank from the given list. Generally, you’ve to follow the below mentioned process to apply for home loan:

  • Fill out an application form (you can get an application form from any branch of the bank or download it from the bank’s official website).
  • Submit the application and pay the processing fee and external costs (different for every bank).
  • Attach all the relevant documents with your application form.
  • The bank will then verify your office and/or residential address.
  • The bank will also conduct an essential credit assessment, income estimation and due diligence based on the given information.
  • The bank will obtain a legal opinion on the given property documents.
  • The market value of the property will be determined by the appointed valuation agency.
  • The bank will issue you a conditional offer letter after you have fulfilled all the credit requirements.
  • After approval of your case, you need to open an account with the bank and sign legal documents and House Finance Agreement.
  • In the end, the bank officer and authorized lawyer will take you and the seller of the property to the bank or registrar’s office for transfer of the property. Original property papers will be given to the lawyer and he will hand over the pay order to the seller in order to complete the legal formalities on behalf of the bank.

Home Loan Interest Rates

Home loan interest rates are usually calculated on the basis of total loan amount, applicable KIBOR and banks’ margin and profit rate. Home loan interest rates are generally revised after 6 months or every year. However, borrower should keep in mind that home loan interest rates do not include other charges or commitments like legal charges, late fees, life insurance, property insurance, processing and appraisal charges and others. So before deciding to take a home loan, always calculate interest rates and other charges.

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