Home loans are a relief to home buyers as it makes buying a home an affordable reality. Earlier, people had to save money for years or rely on unrecognised moneylenders as buying a home required a huge investment. Now you can apply home loan and easily finance a part of the fund requirement at the most affordable rates with much transparency and reliability. However, to make the right choice, it is important to thoroughly understand the steps involved in taking a home loan in India.
Important Aspects for Home Loans
You must keep the following points in mind when planning to apply home loan:
- The property on which you take loan acts as the security.
- Your property can be residential or commercial.
- If you cannot pay the dues, the lender has the legal right to recover the due amount by auctioning the property.
- The following factors affect your home loan approval:
- Monthly income
- Age of property
- Credit score
Step-by-step Guide to Home Loan
The following step-by-step guide to apply home loan in India will help you get started on your journey:
- Application submission
Firstly, you have to apply home loan by submitting the home loan application with your basic information, including
- Personal details
- Contact details
- Residential address
- Income details
- Education details
- Employment details
- Property details and estimated cost
Additionally, you must attach documents for verification of details, such as
- Identity proof
- Address proof
- Income proof
- Age proof
- Property details
- Employment proof
- Education proof
- Processing fee payment
After the application submission, you must pay the loan processing fee. It can vary for different lenders from 0.25- 1 per cent of the loan amount. The lender collects this amount to maintain your loan account and the agent’s commission. Next, you will have to wait for document verification.
- Discussion with the lender
After the submitted documents are verified, there will be a formal discussion between you and the lender. Discussing the loan amount, tenure, interest rate, down payment, and more takes a day or two. You might have to visit the branch/ have an online meeting/ end-to-end doorstep service. You must prepare well in advance for better negotiation. You can use various online home loan calculator services to better understand the various components and EMIs.
- Application Approval Stage
The most crucial step in a home loan process is when the lender accepts or rejects your loan application. Before approval or sanction of a home loan, the lender thoroughly checks your details to gauge whether you possess the ability to repay the loan with the decided interest. The lender might put some conditions before the loan disbursement in a few cases.
- Sanction letter generation
Once the lender processes all your documents, they issue a sanction letter that includes the following details:
- The maximum loan amount that they can sanction
- The interest rate and its nature (fixed/ floating)
- Monthly EMI
- Other terms and conditions
You can negotiate the details if required. If everything suits you, you must sign a duplicate copy of the offer letter and submit it to the loan lender.
- Submission of property documents
Once you accept the offer letter, the lender focuses on the property in question. If you haven’t yet finalised the property, they might give you some time for the property selection. Your property documents must have the following details for easy approval:
- Seller’s name and address
- Name of the property and its address
- Chain of documents
- No objection certificate from the legal owner
- NOC from the board representative and housing society
- Site estimation
A home loan is a collateral-based loan, and your home is the collateral. Therefore, the lender checks the following technical details of the property to draw estimations of its value:
- Stage and quality of construction
- Completion time needed by the house
- The estimated property value
- Age of the building
- Surrounding area
- Building approval plans
- Finalising and signing the loan agreement
The next step is the final registration which involves a lender’s lawyer for the paperwork. It is followed by signing the documents by both parties. You will gave to hand over the original documents to the lender.
- Loan disbursal
The final step after all formalities are clear is the loan disbursal. You will deposit the down payment, and the lender will sanction the loan in your name.
Concludingly, you can apply home loan in India with ease, and the process doesn’t get too long. However, you must wisely choose the funding source.