For many, owning a home is a life goal. They want to make this dream come true by hook or crook. However, buying your own home comes at a huge cost. With retail prices going up at such a speed, it has become very difficult for people to make a home of their own. This is when a home loan comes into the picture. Home loan offers financial assistance that can help you buy a loan. Once you have met all the home loan criteria, you can get a home loan.
Your journey to owning a home begins when you apply for a home loan. Here is a step-by-step guide to help you understand the home loan process. Despite minor differences between lenders, the following general procedure will be similar across all banks. By following these steps, you can ensure a smooth home loan application process.
Step 1: Fill out the application form for the home loan
The process of home loan starts as soon as you fill out the home loan form. One needs to fill out the home loan form along with major documents including identity proof, income proof, address proof, monthly or yearly income details, education documents, details of the property employment information, cost of the property against which the loan is required, and more. Documents also depend on bank to bank, so it is always better to check with them before filling out the form. If you are applying with a co-applicant, you must submit her or his documents, and they must also sign the application form.
Step 2: Document verification
Document verification is the most crucial part of the home loan process. It is very important that you submit the right documents and cross-check every single point. As soon as you submit the form along with the documents, the verification process begins. Your eligibility is evaluated based on the documents you submit. The bank or the organization will check your income, credit score, other liabilities, your age, etc., and then come up with the decision. Additionally, if you are self-employed, banks will also assess the sustainability of your business and cash flow stability. For this, you will also get a call wherein the representative will call you or visit you personally at your home or office to check that you provided the right information. Based on this, loan eligibility is defined.
Step 3: Verification on a legal and technical level
Under this, the applicant is required to submit property-related documents. In most cases, this includes a builder’s agreement, no objection certificate, occupancy certificate, etc. In the case of resale property, the chain of documents needs to be submitted. Once these documents are submitted, the bank will carry out a thorough verification and check if the property is legal and is constructed as per the sanctioned plan, what is the present value of the property and how it will change.
Step 4: Home Loan Sanction
Once the legal and technical verification is done and the loan eligibility is determined, you will be sent a sanctioned letter informing that your loan has been approved. The letter ideally contains the total amount that has been sanctioned, home loan interest rate, the kind of interest rate, EMIs, tenure of the loan, validity of the sanction letter, and terms & conditions, if any. Once you receive the letter, you are required to check the details and if everything is fine, you are required to sign it and send it back.
Step 5: Pay a secure fee
Once you have accepted the sanctioned letter, you are required to pay a certain fee to secure your loan. This is usually charged after signing the sanctioned letter but in some cases, the lender may ask you to pay it before also.
Step 6: Home loan disbursement
After evaluating your credit, legal and technical information, you will be requested to submit the original title documents. The lender will begin the preparation of your discourse check as soon as you submit the said documents and submit a discourse request. Once this is done, you will be required to sign the loan papers. Then the lender will give you the disbursement cheque. Please note that if the property you are taking the loan for is under construction, the sanctioned amount will be given to you in installments, as per the construction progress.
By following the above simple steps, you can get the house of your dreams. However, to make the process smoother and simpler, you should be ready with all the original documents. Also, please make sure that you read all the terms & conditions properly before signing any document.
