A Step-by-step Guide To Housing Loan Procedure

Aspiring homebuyers may question their decision to buy a new house due to the rising cost of real estate. Well, affordable borrowing for a home purchase is still possible with housing loans. Borrowing such a loan gets you an affordable interest rate of around 8.65%. And besides meeting the financial needs of a home purchase with a Home Loan, borrowers can also avail tax advantages. Go through this step-by-step guide for a convenient Home Loan application process. First, the key benefits of housing loans with reputed banks in India.

How Home Loans can Benefit Aspiring Homebuyers

  • Easy Online Application 
  • Minimal Documentation
  • Minimal processing fee 
  • Flexible Repayment Tenure up to 20 years
  • Access to Home Loan EMI Calculator to calculate monthly payments
  • Doorstep Services for Loan Processing

Home Loan Process: Step-by-Step Guide

Step 1: Online Application Form

The Home Loan application process starts with filling up the online application form. Borrowers access the application at the bank’s official website. After that, they need to fill up the necessary information, including residential, educational qualification, banking, employment and income details. 

And the loan application should be supported by the required set of documents, including:

  • ID Proof
  • Income Proof
  • Age Proof
  • Address Proof
  • Banking Information
  • Educational Qualification Proof

Step 2: Application and Document Verification

The lender checks the information and documents provided by the loan seeker. And with these details, the eligibility for a Home Loan is determined for loan approval or rejection. 

Don’t know what the eligibility measures for Home Loans are, check them out below: 

  • Lenders look for a good credit score, generally 750+. 
  • Salaried employees aged between 18-60 years and self-employed aged 18-65 years are eligible for a Home Loan. 
  • Applicants should have an annual income of Rs. 2,40,000 in Delhi, Chennai, Bangalore, Mumbai, and Pune and Rs. 1,80,000 in other cities.
  • Lenders need at least a graduation degree for salaried applicants. This condition does not apply to self-employed applicants.

The lender’s representative verifies the submitted documents and the applicant’s residential address, credit profile, credentials of the employer, etc. The applicants meeting the eligibility criteria get approval at affordable Home Loan interest rates.

Step 3: Loan Sanction

The borrower will receive a loan sanction or rejection letter upon information verification. The loan will be sanctioned if the lender finds all the submitted information accurate. The letter contains details like the approved loan amount, offered interest rate and tenure, and other loan terms and conditions.

Step 4: Processing Fee Payment

Lenders usually charge a processing fee from the applicants; this needs to be paid to process the loan application. The fee is the percentage of the loan amount, which generally ranges from 0.5% to 1%.

Step 5: Property Assessment and Value Estimation

The lender checks the property from legal aspects and estimates its fair market value. An expert from the lender visits the property location to assess its market value. Here the borrower needs to produce the mortgage property’s original documents, encumbrance certificate, No Objection Certificate (NOC) or other documents as per the institution’s lending policy. 

Step 6: Signing the Loan Agreement

After completing the legal procedure for property registration, the borrower needs to sign the housing loan agreement and hand over the property deed to the lender. Here the borrower may need to pay stamp duty and provide post-dated cheques to the lender. The lender will retain the original documents until the loan is repaid fully during the loan tenure.

Step 7: Loan Disbursal

After successful documentation, estimation and legal procedure, the loan amount is disbursed to the applicant via cheque or demand draft. It may be issued in the name of the property seller. The lender can provide up to 90% of the property value, depending on the lending risk involved in the deal. If the LTV (Loan-to-Value Ratio) is 80%, the lender is financing 80% of the property value, and the borrower needs to pay the remaining amount as a down payment.

In the end, Home Loans are a widely used financial tool that helps individuals fund a dream home at affordable rates. Look at the budget, and arrange money for a down payment. Apply online with renowned banks offering low home loans interest rates, depending on the borrower’s credit profile.