Process & Steps: Home loan 2022
It is a major decision for everyone to buy his dream home in his lifetime. It will be beneficial if anybody pays the entire cost of the home by means of self-funding by doing this you will get immediate ownership of the property and will save lacs of rupees on account of interest payable on the home loan.
A home loan plays a very important role in buying a home. Taking home a loan is really a long journey in which many stages are involved from selecting your dream home to actual loan disbursement. You can get the home loan in a smooth way by knowing the following steps involved in the entire home loan process:
Below is a list of various stages involved in the home loan process with detailed information on each and every step:
Select your Dream home:
The very first step involved is to choose the right property. Before the actual buying take place you should compare with all the options available in the market and go through with detailed costing for buying the flat/ home.
When you choose the right property it is always advisable to get pre-approval of your home loan so that no interest on the delayed payment accrues to the builder or the owner of the property.
Apply for a home loan along with the login fee or processing fee:
Now the actual process starts off getting a home loan. You need to submit an application form (provided by the bank) along with all the details such as personal details (Name, PAN Number, date of birth, age, marital status, nationality, residence address- correspondence as well as your permanent address), Profession details (Your employer’s name – in which company you are working with, stability with the current employer, total working experience, etc.), Income details (Monthly and annual income – Gross and net take home, Any other income details like interest, rent, agriculture income), Educational details (Highest qualification), Saving details (Bank statements, Investment details – F.D., R.D., Insurance), sources of funds to pay the own contribution. Almost every bank or financial institute will ask for the above-mentioned details.
Your application form should be supported with all the documents listed below:
- Income proof (Salary slips)
- Age proof (10th Certificate)
- Identity proof (Pan Card)
- Address proof (Voter id card, Ration card, Passport, Passbook)
- Employment details (Id proof provided by your current employer, Employment letter)
- Proof of educational qualifications (Degree and mark sheet of highest qualification)
- Details about the property if finalized
- Bank statements (last 6 months or 1 year)
- Bank will verify all the details provided by you with the help of all the supporting documents
- provided by you also the bank will cross-check the supporting documents with the originals of the
- same to verify the authenticity.
- You need to deposit a login fee cheque favoring your bank or a processing fee cheque so that bank can
- proceed further with your application.
Bank scrutinizes the application Home loan
After receiving your home loan application bank will immediately start to evaluate your application. It will verify all your documents. After evaluating your loan application bank will ask for a personal meeting with all the applicants with its bank officials.
In this personal meeting, the bank tries to know more about you and your repayment capacity. After satisfying the personal meeting bank starts the process of verifying all the documents provided by you along with your loan application.
To confirm and verify all the details provided in your loan application form a field investigation process is initiated. A field executive will personally go to your residence and your office address to verify the facts. Bank also cross-check the references provided by you.
Home Loan Eligibility?:
Generally, the two most important factors decide your loan eligibility: Your income details with stability and your credit history. Bank verifies your income details provided by you and also cross-checks your credit history.
Bad credit history will have a negative impact on your loan eligibility and the bank can reject your loan application if you have a bad credit history, on the other hand, if you have a high credit score it will improve your loan eligibility.
Normally the maximum available loan is up to 80% of the property cost and sometimes 85% where the property value is less than Rs. 20 Lacs subject to bank assessment. Your saving habits increase your loan eligibility.
Choose the best Home loan offer only after comparing all the factors involved:
Almost every individual thinks of only the rate of interest to be charged by a bank or financial institution while comparing home loan offers of different banks. You should not forget to consider all other charges and fees applicable in getting a home loan like processing fee, legal fee, pre-payment charges, lock-in period, admin charges, etc.
Generally, the processing fee or login fee is non-refundable. The bank charges the processing fee between 0.25% to 1% of the loan amount. Bank charges this fee to meet the expenses involved in getting your home loan application sanctioned and disbursed.
Your CIBIL report:
Your credit history directly impacts your home loan eligibility. A bad credit history with a poor or low credit score will always have a negative impact, on the other hand, a high credit score will increase your loan eligibility. Your credit score and credit history play a vital role in the sanctioning process.
If the bank finds that you are not able to repay the money back with interest on time, it will simply deny you any home loan offer, on the other hand, if the bank finds that all’s well and is convinced by your repayment capacity, it sanctions your home loan.
Bank will then issue a conditional sanction along with all the terms & conditions, you need to fulfill all the conditions required by the bank to get the full sanction and disbursement.
Sanctioning of the loan & Offer letter:
Bank will sanction the loan to you with a written document called offer letter in two copies with the following details:
How much loan is sanctioned?
Rate of interest applicable
Type of interest – Fixed or Floating
Tenure for repayment
Details of the special scheme if applicable
A detailed list of terms and conditions related to home loan
Acceptance Copy of the Offer letter:
If all your needs meet with the offer sanction letter then you need to sign the duplicate copy (accepting all the terms and conditions mentioned in the offer letter) and have to submit the accepted copy to the bank for its record.
Verification of legal documents
After sanctioning and acceptance of the home loan bank will initiate the process of verifying the legal documents of the property which you intend to buy. A home loan is a secured loan and the property will be collateral for the same so the bank will verify all the legal documents associated with the property.
You must submit all the original documents associated with the property to the bank in its safe custody until the whole home loan is re-paid by you with interest. If the property is disputed bank will deny disbursing the loan as banks don’t lend for disputed properties in any circumstances.
Technical valuation of the property:
Bank also does the technical verification with the help of the expert technicians associated with the bank’s panel. An expert will go to the location of the property to assess the technical valuation of the property and submit the value of the property as assessed by him.
In the case of under-construction property, the bank will verify the stage of construction and also the progress of construction.
Bank will ensure that the property has a clear title and is also technically sound and meets the valuation standards of the bank.
Loan disbursement after signing the Agreement
Once the bank goes through all the formalities and is satisfied with the legal and technical valuation of the property it will then start the process of disbursement of the home loan.
You need to sign the loan agreement provided by the bank along with the post-dated cheques and mandate ECS form. Bank will disburse the home loan in one go if the property is ready to move or in installments if the property is under construction.
