Procedure for Getting a Home Loan

Numerous housing finance companies, public banks, and private banks offer housing loans, which allow you to borrow money to buy a home and pay it back in monthly instalments. However, prior to applying for a home loan, it is important to understand the procedures involved in getting the loan.

Here are the steps of the housing loan procedure.

• Step 1 - Fill in the Application Form
  

Completing the application form is the first step in getting a home loan. You need to fill in your personal information and details about your earnings, employment, current assets, property, schooling, and so on in the form.

• Step 2 - Attach the Required Documents

After you've completed the home loan application form, attach the supporting documents listed below:

1. Identity Proof: PAN card, Aadhaar card, passport, driving license, etc.

2. Address Proof: Aadhaar card, passport, driving license, utility bills, etc.

3. Age Proof: Birth certificate, 10th certificate, Aadhaar card, PAN card, passport, etc.

4. Evidence of academic qualifications

5. Income Proof: Bank statements, ITR, etc.

6. Business Proof: Balance sheet, profit & loss statements, business license, etc.

7. Property Documents: Approved copy of the building plan, a letter of consent from the society/builder, and an estimate of the cost of construction

• Step 3 - Pay the Processing Fees

The lender may request a processing fee after you submit the home loan application form with the supporting documents. The processing fee for a home loan is non-refundable and varies from one lender to another. It typically ranges between 0.25% and 1.0% of the loan amount requested. 

• Step 4 - Document Verification

The lender will verify the submitted documents and other details. Bank representatives may even visit your home or contact your employer to validate the information provided in your home loan application. Your lender will also look at your credit score and credit report from one or more credit bureaus during the checks. 

• Step 5 - Sanction Letter: 

You will receive a sanction letter after passing the document verification process, which will typically include the following information:

1. Sanctioned loan amount

2. Applicable interest rate

3. Interest rate type – fixed or variable

4. Loan term

5. Repayment method

6. Special plan (if applicable)

7. Your home loan's terms and conditions

8. Your mortgage's policies

9. Other details, such as your home loan policies, may also be included in the letter
   

 

After receiving the letter, sign and return the acceptance copy to the lender. The acceptance copy is a duplicate of the sanction letter kept by lending institutions for record-keeping.

• Step 6 - Verification of the Property and a Legal Check:

The bank will verify the property collateralised before disbursing the loan. Original copies of the property title, NOC, encumbrance certificate, and any other documents requested by your lender will be required. The property will be subjected to a legal review to ensure the title is clear and that no disputes exist. 

 

The bank will also conduct a specialised valuation of your property. In the scenario of an under-construction property, the bank will examine the property's location, construction stage, quality, and progress, among other things. If the property is ready to sell or resell, the bank considers its age, ownership, construction quality, maintenance, location, and legal clearances.

• Step 7 - Disbursement of the  Home Loan: 

You will receive the final agreement from the lender once all of the above steps have been completed successfully. Subsequently, the home l