Contrary to popular belief applying for home loan doesn’t involve a complex process. It’s similar to the popular proverb “Well begun is half done”. Most potential applicants stay stuck on the idea of how they would like to initiate the Home Loan Process. Anyone can apply for a loan with or without deciding or finalizing the property.
In order to help clear your mind off any misconception, we have listed the whole procedure that one has to go through while applying for a loan.
Step 1: Applying For Loan
- Self Assessment
First step, before driving into the world of loan and banking, make sure to do your research. Ensure to visit websites of multiple banks and read about these Housing Finance policies. Also make sure to collect the document required for applying for Home Loan, which is mentioned on these websites.
Place an Enquiry – In case you have any query regarding a financing company’s policy, you can contact their officers to solve your confusion.
Keep Your Documents Ready – It’s always better if you ensure that you have all the documents required settled in a separate folder.
- Identity Proof: Aadhaar Card, Passport, PAN Card
- Residence Address proof: Aadhaar Card, Passport
- Income Proof i.e., income tax return, 6 months’ Salary slips Or Business Address and Annual Income proof for self employed applicants.
- Obligation Details including the statement of accounts
- Property Documents, for finalized property i.e. Allotment letter that states agreement of sale & information of previous property holders in case the property is being resold.
- Apply For the Loan
Now that you have cleared you mind, about which company you want to choose, fill your application and visit their nearest branch. Most banks today provide Doorstep services, so in case you feel busy or lazy, you contact the bank representatives to pick up your documents from your house. Well that the least they can do, for the high home loan interest rates they charge.
Step 2: Home Loan Sanction
- Bank Assessment of Applicant
Now that you have applied for the loan and provided all your documents to the financer, they will recheck all those details and your financial creditability.
- Determining Applicant financial eligibility – Lender will validate all the information provided by the applicant checking all the eligibility criteria like their age, income, other liability and repayment track.
- Property Valuation – Once applicant eligibility criteria is determined, the lender or financer assess all the details about the property the applicant is interested in to see whether he/she will be able to afford that price.
- Legal Valuation – Now that all the investigation is done, the financer caries out legal verifications for the property using a Lawyer. Bank will keep all these legal documents till the applicant repays the loan. However borrower can still request to keep a copy of these property reports by paying bank a nominal fee.
After the full verification is complete, Bank sanctions the Home Loan to the applicant against the property, issuing a sanction letter for the borrower. This Home Loan agreement contains all the conditions and terms relating to the loan. Some banks also demand borrowers to submit some of their original documents like ECS, and other undertakings based on their policies of the Home loan process.
Step 3: Home Loan Disbursement
Now that the Home Loan agreement is finalized and signed, the borrower selects a date for registering property, coordinating with Seller. Simultaneously, the borrower requests a disbursement or a Demand Letter, from the Bank.
And that’s it! Bank will now issue the amount in the form of Demand draft or cheque to the seller and the borrower will be able to live in his dream house. The EMI amount starts commencing from the disbursement day.
Some Important Points:
- The original document of the applicant remains with the bank during the loan period.
- If the selected property values below 20 Lacs, then the applicant can avail almost 90% loan amount from the bank. And if it values over 20 Lacs, then banks avails around 80% of the property value as the loan amount.
- Home Loan Approval will be decided solely by the bank’s discretion.
- The whole procedure for applying and getting the loan can take about 2 weeks.
- Stamp Duty and other registration costs, are included in the loan amount by the bank, which is paid by the applicant or the borrower.
Now the loan is sanction the borrower has to pay EMI’s every month to the bank, till the full payment of the loan is paid. See, applying for a Home Loan is not that difficult or complex as it might appear. We understand that people often get intimidated by all the policies and other terms and conditions of the bank. Today, fortunately banks have become more advanced and supporting, where they provide customers with a 24 hour service, so don’t shy away from asking any question.
Do let us know if you have any question regarding the home loan in the comment box.