Your Step-by-step Guide to Home Loan Application

Here are the 8 steps for Home Loan Application:

1. Fill up the Home Loan Application Form:

After you finalise the home loan lender, the first step to avail of a Home Loan is filling out the loan application form. With many banks and Housing Finance Companies (HFCs) offering online application facilities, the Home Loan application process has become very quick and easy. You may visit the lender's nearest branch or the official website to fill out the application form. The application form will require your personal information, such as name, address, contact details, educational details, income details, employment details, etc. Furthermore, you are also required to submit the necessary proofs/documents, such as identity proof, address proof, employment proof, last three months' salary slips or last two years' ITR (in case you are self-employed), etc.

2. Pay the Processing Fee:

When you apply for a Home Loan, the banks and HFCs charge you a processing fee to do the preliminary work like verification of your documents and property, which plays a significant role in the loan approval process. However, paying the processing fee does not ensure your loan will be approved. Besides, the processing fee is non-refundable, irrespective of whether your loan gets approved or rejected. Some lenders charge a part of your processing fee in advance, and the rest after the loan is approved. The processing fee may vary from lender to lender. Many banks and HFCs charge a processing fee as a percentage of the loan amount, whereas others charge a flat processing fee, irrespective of the amount.

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3. Eligibility Check:

Once you pay the processing fee, the lender starts with your eligibility check for the loan. The lender may ask you to visit the branch or arrange a meeting at your home or work to discuss the loan process. The lenders generally prefer in-person visits, especially if you are a business owner, as it helps them understand the nature of your business. Apart from the general discussion, the lender evaluates your eligibility based on your income, liabilities, credit report, etc. If you are a business owner, your repayment capacity based on the stability of cash flow and sustainability of the business will also be taken into consideration.

4. Verification of Documents:

Document verification is another crucial step in the Home Loan application process. The banks and HFCs do a verification of all the documents you have submitted. They may verify your employment by contacting your employer. They will also do the address verification by visiting your home and/or work address if not done in the earlier step. In case of any pending paperwork, you will be given a specified timeline within which you must submit the pending documents. Failing to do so may result in loan application rejection. Moreover, in case the lender finds any difference in the information provided by the applicant and the facts, forgery, fraud, etc., the lender can reject your loan application.

5. Loan Approval Process:

Depending upon your eligibility check, document verification, and the lender's credit policy, the lender decides whether or not to accept your loan application, and the same will be communicated to you.

6. Verification of the Property:

Once your loan is approved, the lender will verify the property you are buying. The legal check on the property will ensure that the property is clear, without any dispute or conflict. If you have not finalised the property yet, you can request a time duration to finalise one. In case the property is under construction, the lender will check the progress and the quality of construction. Whereas, if it is a resale property, the lender will check the age, quality and maintenance of the building.

7. Receive the Sanction Letter:

After all the remaining paperwork is cleared, you have to sign a loan agreement with the lender. At this stage, you have to submit all the property-related original documents to the lender. These documents are mortgaged with the lender until the entire loan amount is repaid. You will receive the loan agreement that includes all the terms and conditions of the loan you are availing, such as loan amount, interest rate, loan tenure, mode of repayment, and other terms and conditions. After carefully reading the loan agreement, you need to submit your acceptance to the lender by signing it.

8. Loan Disbursal:

The lender will disburse the loan upon signing the loan agreement and submitting all the pending documents. You will receive the cheque in favour of the builder if you are purchasing the property from a builder. If you have availed of a Home Loan from the bank where you have a Savings Account, the EMIs will get deducted directly from your bank account through a standing instruction. Whereas in case you do not have a bank account with the lending bank or availing of a home loan from an HFC, your EMIs will get deducted from the bank account you register for NACH, i.e., Nationalised Automated Clearing House, which is a centralised payment solution.

To conclude:

This is a standard Home Loan application process across banks and Housing Finance Companies. However, the process may vary depending upon the lender's policy and the borrower's profile. Before applying for a Home Loan, it is crucial to choose your lender wisely and understand the loan process completely. You should not delay submitting any pending documents or completing any formality from your side once the loan is sanctioned, as you will be charged interest right from the date the loan is sanctioned.

Warm Regards,
Ketki Jadhav
Content Writer