In this series of “Buying Real Estate in Sri Lanka,” you are about to discover “What are the requirements for a housing loan?” if you haven’t read the previous article “The pros and cons of CASH vs LOAN when buying your dream home” click here. You can also find the entire series on “Buyers Guide”.
A house is your safe haven. It is the place you unwind, and truly let go. Most of us dream of building, decorating and finally moving into our dream home. However, in certain instances finances don’t always help make this dream a reality. So what do you do when you’re ready to find a place to call home, but your wallet isn’t in agreement yet?
You apply for a housing loan!
What is a Housing Loan?
Simply put, it is the sum of money borrowed by a bank/financial institution to purchase a house. The bank you choose to borrow from will hold on to the deed of the house or land you purchase until you have fully paid off this loan.
What are the exact requirements for it?
1. The Application
First, you need to obtain a housing loan application from the bank or institution you are looking to borrow from. Keep in mind that you can only apply if you are between the ages of 18 and 55 (may change according to the bank you reach out to). You must also be employed and actively earning an income.
2. Proof of Employment
Being employed just isn’t enough – you’ll need to prove it too! To do this you will need,
- A confirmation letter of employment from your workplace/employer
- Salary slips that date back at least 6 months
Q: But what if I’m Self Employed?
A: Well, that’s no problem either! To apply for a loan under this segment, all you need are tax payment receipts that go back at least 3 years. You also need to include your Tax File Number, recent bank statements (minimum of 6 months) of your business, Computation Copies certified by the Revenue Department.
Q: I don’t pay taxes though – what then?
A: In that case, you’ll need the following documents.
- A certificate of income – certified by the Grama Niladari and attested by the Divisional Secretary of your region.
- An audited report of your Financial and Management Accounts that span 3 years.
- Sales, Purchases and Expenditure details from the last 6 months.
3. Legal Documentation
Owning a plot of land in this day and age doesn’t come easy. You must be able to prove your right to do so through legal means.
- You need to provide your bank with the title deed
- Survey plan referred to the deed
- Certified original extracts of the property for the last 30 years
- Local authority certificates issued within the last three months.
- Tax receipt for the current year
4. Other Requirements
Since this is a case of construction, you also need to provide your financial institution with your building plan (preapproved)
- If it’s a residential property – you need to provide your bank or institution with a Certificate of Conformity (COC – a statement issued by the seller or authorised party that assures the product reaching the required standard or quality).
- If you are constructing a house – you may need to provide a bill of quantities acceptable by the bank.
This is just the tip of the iceberg – there may be a lot more information you might need. Remember to analyse the requirement of the shortlisted choices of your financial institutes before you select the one you’re ready to obtain your loan from. Reach out, inquire and most importantly – stay prepared!
Have any questions with regards to housing loans? Feel free to reach out to us at Kelsey Homes, the premium housing developer with over 35 years of housing excellence in Sri Lanka!