Home Loan Sanction Letter

 Understanding the process of a home loan is a vital step if you plan to avail a home loan. The process is classified into three stages - loan application, loan sanction, and loan disbursal.

A home loan gets sanctioned or rejected during the sanction stage. The lender issues a home loan sanction letter after checking the applicant’s eligibility and verifying the documents submitted by them in this stage. The sanction letter of home loan is proof showing the applicant’s eligibility for the loan amount.

What is the Process of Home Loan Sanction

Approval of home loans varies from lender to lender. While some take three to four weeks to sanction, some take only 10 -15 days to complete the loan procedure. A delay may occur if there is any lack of information or insufficient document proofs.

When a home loan borrower fulfils the eligibility criteria and submits all the necessary documents along with the application form to the bank or the housing finance company (HFC), they check the applicant's financial details and verify the applicant the documents submitted. If any property is used as collateral, the lender evaluates its value. Along with all these, the lender will assess the credit score or creditworthiness of the applicant.

If everything is found satisfactory, the lender will issue the housing loan sanction letter.

What is a Home Loan Digital Sanction Letter

With the age of digitalisation, the home loan application process has been simplified. Many lenders offer digital home loan application procedures, and if you are qualified to apply for one, you could receive a home loan sanction letter online.

A digital home loan sanction letter is the digital form of the home loan approval document sent by the lender before issuing the final loan agreement. If you choose any one of the housing finance companies and top banks to get a home loan, you can receive a house loan sanction letter through a hassle-free process. It is easy to check your home loan application status online.

Benefits of a Digital Home Loan Sanction Letter

Here are the benefits of a digital home loan sanction letter for you to check out.

• It proves the applicant’s eligibility to receive the sanctioned loan amount.

• It gives a clear idea about the home loan details, including the EMI you have to pay. So, the applicant can consider it before signing the final document.

• If the applicant purchases the home from a developer or a housing society, the home loan sanction letter is a necessary requirement.

• If a dispute arises between the lender and borrower, this sanction letter can act as proof of evidence in matters of terms and conditions.

Eligibility Criteria for a Digital Sanction Letter

A digital home loan sanction letter has the same eligibility criteria as a home loan. To receive the digital letter, you have to fulfil the following requirements.

• Nationality - The applicant should be an Indian.

• Age -

• If the applicant is a salaried individual, they should be between 23 years and 62 years.

• If the applicant is a self-employed individual, they should be between 25 years and 70 years.

• Employment status -

• For salaried individuals, at least 3 years of experience.

• For self-employed individuals, at least 5 years of business vintage.

• CIBIL score - Score of 750 or above.

Check out a detailed List of House Loan Eligibility Criteria.

Documents Required for the Home Loan Sanction Letter

Here is the complete list of documents required to carry out the home loan sanction letter process.

• KYC documents - Passport/Aadhaar card/Voter’s ID/Driving licence

• Your employee ID card

• Last two months’ salary slip

• Last three months’ bank account statements

Check out Detailed List of Documents Required for Housing Loan.

Home Loan Sanction Letter Sample Format

A home loan sanction letter varies from lender to lender. Here is a sample format of the letter for you to understand.

Date: DD/MM/YYYY

Dear XYZ,

Thank you for choosing ABC Bank. Based on the application and information provided therein, we are pleased to extend an offer to you for a loan as per the preliminary terms and conditions mentioned below:

Additional conditions to apply prior to loan disbursal:

1. Repayment from ABC Bank

2. Legal vetting and search to be conducted

3. NOC and offered collateral

4. Confirmation form, official ID and copy of ID

What Does a Home Loan Sanction Letter Contain?

A home loan sanction letter means the lender has approved the home loan the applicant applied for. The letter contains all the terms and conditions related to the approved loan.

It contains:

1. Principal amount

2. Applicable fixed or floating interest rate

3. Loan tenure

4. The base rate for interest calculation

5. Mode of loan repayment

6. Loan processing fees

7. Details of EMI/ pre-EMI payment

8. Tax benefits

9. Home loan sanction letter validity

10. Special scheme (if applicable)

Sanctioned Limit in a Home Loan Sanction Letter

The sanctioned limit in a housing loan sanction letter differs from person to person and depends on various factors like:

• Applicant’s eligibility like age, employment status, credit history, etc.

• Down payment of the loan

• The market value of the property to be purchased