Today millions of people rely on home loans to buy their dream house. Since not everyone is aware of the right process to acquire a home loan, therefore, a lot of home loan applications get rejected. To ensure your home loan application does not get rejected by the lenders, it is important to be well versed with the bank’s criteria to sanction home loans. In addition to this, an applicant should also know his/her financial obligation towards the bank to avoid a financial slowdown in future. Read on to know more about the home loan and the right procedure to acquire a home loan in India.
Step 1: Your home loan procedure begins with the formal application to the bank. This can be done by visiting the bank, filling up the home loan application form and providing all the supporting documents based on which the bank will determine your home loan eligibility. Most banks will generally ask you to furnish a copy of the following documents:-
1. Proof of identity
2. Proof of address
3. PAN card
4. Employment details
5. Proof of income
6. Bank statement
7. Educational qualification
Step 2: The second step of your home loan approval process will include the payment of non-refundable processing fee that an applicant needs to provide to the bank. This amount is used to initiate and maintain the home loan process. Recently, banks are waiving the processing fee to attract more home loan buyers. You can even negotiate with the bank’s representative and try to avail this benefit. As not every bank in India waives off the processing fee, you need to ask your bank about this benefit in advance.
Step 3: The step three of the home loan application process includes scrutinizing of your documents and the evaluation of the loan amount you are eligible for. You are required to meet the bank’s representative multiple times so that they can measure your repayment capacity. After the personal interaction, the bank’s representative will visit your office and residence to confirm information that you provided to the bank.
Step 4: The evaluation of your repayment capacity is important. It may either approve or disapprove your home loan application depending upon how satisfied the bank representative is from your repaying capacity.
Step 5: At this stage, the bank begins to draft your offer letter with the following details:
1. Applicable interest rate
2. Mode of payment
3. Loan term
4. Fixed or floating rate of interest
5. Terms and conditions associated with your loan scheme
You are required to submit the signed copy of the letter to the bank if you agree with all the terms. An acceptance copy is a duplicate adaptation of the offer letter that you must provide to the bank for their records. Administrative fees, if charged by the bank is deposited at this stage.
Step 6: After the distribution of the offer letter, followed by your acceptance, the bank will verify the property, before disbursing the loan amount. For this, you are required to submit the original copies of the title deed, no objection certificate (NOC) and other supporting documents that the bank may ask for. The bank will conduct a legal check of your property to ensure that the title is clear and there is no dispute associated with the property. In case of an under-constructed property, a technical evaluation will be conducted in which the location of the property, quality of construction and progress of the project will be checked. Once all the formalities are completed, your home loan amount will be disbursed by the bank.
Note: A home loan is a secured loan wherein your property is the collateral. Which means that the bank can claim your home if you’re unable to pay off home loan amount on time.
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