A Handbook for an Easy Home Loan Process

The home loan process is easy and simple provided you have a sound knowledge of all its steps and impact.

Below are the nine steps in a home loan process:

1. Loan Application Form and Documentation

The procedure of home loan starts with an application form. You have to fill in the below details in the application form of home loan:

• Personal details like name and number
• Residential address
• Monthly or annual income
• Employment details
• Educational details
• Property details
• An estimated cost of the house property
• Ways of financing the house property

List of documents required for taking a home loan:

• Age proof
• Residential proof
• Employment details
• Income proof
• Identity proof
• Property details
• Bank statement or passbook

1. 2. Payment of Processing Fee

Once you have submitted the application form and the required home loan documents, you need to pay the processing fee to the bank. Banks usually charge 0.25%-0.50% of the total loan amount as the processing fee. However, you always have a chance ofnegotiating this fee with the bank.

1. Discussion with the Bank

The bank will have a discussion with you on the documents submitted. It takes around 1-2 days for the verification of the documentation. A detailed verification is done by the bank to ensure that you have the capability to repay the loan.

1. Validation of the Documents

The bank will carefully validate all the submitted paperwork. The bank will validate the following:

• Residential proof(previous and current)
• Employer details
• Credentials of the employer
• Workplace contact number
• Residence contact number

Most banks visit the residence and workplace to verify the details of their applicants.

1. Sanction/Approval Process

One of the most crucial steps in loan process is home loan sanction letter or approval by the bank. Bank will sanction the loan amount only if it is satisfied with the verification of all the documents. A bank generally checks the following in detail:

• Age, qualification and experience details
• Financial transactions with the bank of the applicant
• Monthly and annual income
• Job stability
• Current employer details
• Ability to repay the loan

After analyzing the above-mentioned factors and the eligibility criteria, the bank sanctions or approves the maximum loan amount that the applicant can avail of.

1. Loan offer Letter

On the approval of the loan amount, the bank sends you the offer letter about the loan:

• Total loan amount transitioned
• The interest rate on the loan
• Type of interest rate – fixed or variable
• The tenor of the loan
• Mode of loanrepayment
• Terms andconditions of the loan

You have to sign two copies of the offer letter as an acceptance copy, one for yourself and the other for the bank’s records.

1. Processing the Property Papers with a Legal Check

Once you have accepted the offer letter, you need to submit all the original documents of the house property to the bank. These papers will remain with the bank as a security until the tenor of the loan. The bank will then conduct a legal check of the property papers for authentication.

1. Conducting a Technical Check of the Site

Banks usually conducts a technical check on the site on which you are planning to build or purchase a house property. The bank will send a property expert to the site who can be an employee of the bank or a civil engineer or an architect. This technical check is done to estimate the cost of the site and analyze the construction progress.

1. Final Loan Deal

The last step of the home loan process is the final registration of the home loan deal. After all the paperwork and the checks are completed, the lawyer of the bank prepares the loan agreement. After a thorough analysis of all terms and conditions, you can sign the loan agreement. You will get the loan amount through cheques by the bank.

The Bottom Line

What is most important for you to focus on a home loan process is to study all the terms, conditions and policies in the loan agreement. It assists to have a hassle-free loan repayment schedule in future.