Process and Steps: Home Loan

Apr 17, 2011     Posted under: Home Loan

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There are various steps involved in getting a Home Loan from selecting your property to filling up the loan application.

Following are the various stages in Home Loan:

  • The first step involved in the process is to find the property which is followed by the verification of property documents, post that the documents are examined and simultaneously you can start searching for the lender who can offer the best Home Loan Deal after checking your eligibility criteria.
  • Know the Home Loan Eligibility: Banks offer the loan amount only after checking your profile & based on various eligibility criteria’s like age, income & salary banks lend you the money. Also, take into account that the bank will provide the loan in range of 75-85% of the total property cost. Talk about the inclusion of the registry amount with the loan. Also take into account your total income, provide complete details to bank.
  • Select the Best Home Loan after evaluation: Comparing home loan interest rates is the primary feature in the home loan selection, however other fees & charges like Application fees, processing fees, legal charges should not be neglected when comparing various loan offers.
  • Applying for the Loan: After you have selected your lender, you have to fill in the application form wherein the lender requires complete information about your financial assets & liabilities; other personal & professional details together with the property details & its costs.
  • Documentation & Verification Process: You are required to submit the necessary documents to the bank which will be verified together with the details in the application. The verification might include the verification of your residential address and official (place where you are currently employed) address.
  • Credit & default check: Bank checks out the borrower’s loan eligibility (through repayment capacity) & the amount of loan is confirmed. The borrower’s repayment capacity is reached which is based on the income, salary, age, experience & nature of business etc. Bank also checks credit history through the CIBIL Score which plays a critical role in deciding & approving your loan application. Low Credit Score implies that the bank upfront rejects your application on the basis of earlier credit defaults; on the other hand high credit score gives a green signal to your application.
  • Bank sanctions Loan & Offer letter to the borrower: After the credit appraisal of the borrower bank decides the final amount & sanctions the loan, the bank further sends an offer letter to the borrower which constitutes the details like rate of interest, loan tenure & repayment options etc.
  • Acceptance Copy to the Bank: The borrower needs to send an acceptance copy to the bank after the borrower agrees with the terms & conditions in the offer letter.
  • Bank checks the legal documents: The bank further asks the legal documents of property from the borrower to check its authenticity so as to keep them as a security for the loan amount given. The next step involved is the valuation of the property by the bank which determines the loan amount sanctioned by the bank.
  • Signing of agreement & the loan disbursal: The borrower signs the loan agreement & the bank disburses the loan amount.

NitiN Kumar Jain

Nitin works in an IT MNC professionally but blogs and owns NKJ Live. He is also the co-owner of a professional start-up ARGHAM BYTES

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  • Sridevikarrireddy

    Hi is it compulsory to get the home loan sanctioned at first before the house registration. Can any bank rejects home loan b’cos the property is already registered even before the loan gets sanctioned?Pls let me know.

    • Amit sahrawat

      There is no issues with loan approval even if the property is registered earlier. Bank looks sale-deed agreement, where in every thing is clearly mentioned.
      Had the registry not been done earlier, the registry amount can also be included in the total loan amount.

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