Applying for a home loan has become a lot easier than it was until a decade or two ago. Read on to know the processes involved in applying for a loan.
Today, most people in India prefer using the online methods to make payments, do banking, as it is not only time-saving and easy but also gives you the liberty to complete your tasks on the go. This applies to home loans too. But, if you are a first-time homebuyer and have no prior experience with applying for a loan, knowing the process involved will help you apply for a home loan easily.
The first step in applying for a home loan online involves filling the loan application form with the lender. You must provide your personal information like name, gender, address, occupation, office/business address, income, education, etc. in the form for the lender’s perusal. Besides, you must submit certain documents like ITR of the last three years, bank statements, income certificates, residence proof, employment proof, identity proof, etc. along with the application form.
Once you submit the necessary documents, then the lender will verify the same. It usually takes about 2-3 working days for the verification process. During this period, you may be asked to visit the lender’s office for a face-to-face discussion. Typically, the lenders do this to assess your repayment capacity.
Apart from verifying if the documents are authentic or not, the lenders also carry an extensive background check of your financial credentials. Based on the details you mention in the application form, the lender may verify your salary, past loan history, office address, etc.
Once the lender is fairly convinced that you have the financial capacity to repay the loan within the specified tenure, they begin the sanctioning process. At this juncture, you must pay a processing fee; it is an amount that the lender charges to process your loan application. Typically, most lenders charge 0.50% of the loan amount applied as processing fees. Some lenders may even charge a fixed sum plus the applicable taxes. The charges are usually levied to investigate your eligibility, verifying the property valuation.
This is one of the critical steps when you apply for home loan. After you have paid the processing fee, based on the lender’s assessment of your profile, they will decide the maximum loan amount you can borrow. Also, at this stage, the lenders determine the interest rate based on the amount you can borrow and loan tenure. The lenders usually communicate this through an official sanction letter confirming that your loan application is approved.
When you get the sanction letter, you can review the same and confirm whether you accept the offer or you reject the same. If you accept the offer, the lender will proceed with the next step and ask you to submit property-related documents. If you reject the offer, you must convey the same in writing to the lender. Remember, if you reject the offer, you may lose the processing fee as, in most cases, it is non-refundable.
After the lender receives your approval on the sanction letter, you will be asked to submit property-related documents. This will remain in the lender’s custody until you fully repay the loan. The documents required usually include the full chain of ownership, sale agreement, NOCs obtained from the local civic authorities, seller’s ID and address proof, etc. The lender will verify the papers and conduct a physical inspection of the property before approving the letter.
The last step in the home application process is the disbursal stage. You must sign the loan agreement documents at this stage, and the lender will then disburse the amount as per the agreed terms and conditions. Typically, if you are buying a new home from the builder, the lender will pay the amount in favour of the builder in a single payment.
Now that you are aware of the various steps involved, you can take an informed borrowing decision.