Numerous individuals avail of home loans to buy their dream houses. However, many of them are unaware of the details of the home loan procedure. Hence, this article aims to educate borrowers on the rules, regulations, and intricacies of applying for a home loan.
How to Apply for A Home Loan in 6 Simple Steps
Many financial institutions extend pre-approved offers on home loans, loans against property, etc. This saves time by streamlining the application process. Individuals can check their pre-approved offers by entering their requisite information. With a better comprehension of the home loan procedure, applicants can avoid getting their loan applications denied or defaulting throughout their repayment tenor. Here are the 6 steps involved in a home loan application process:
Step 1: Check the eligibility criteria
The first and foremost step of a home loan application is to check whether the applicant meets the home loan eligibility criteria. Here are the eligibility criteria all applicants must meet to successfully avail of a home loan:
- Employment
- Salaried: More than 3 years of employment
- Self-employed: More than 5 years of business vintage
- Applicant’s age
- Salaried: 23 to 62 years old
- Self-employed: 25 to 70 years old
- Nationality
Indian resident with a property in the country
- CIBIL score
Ideally above 750
Step 2: Loan application
Applicants who meet the eligibility criteria can proceed with their online housing loan application process. Here are 5 simple steps to complete one’s online loan application:
- Navigate to ‘Home Loan’ page.
- Fill up online application form by entering required information.
- Provide mobile number and confirm OTP verification.
- Choose loan amount and repayment tenor.
- Confirm loan application and pay processing fee.
Upon completion of above steps, applicants receive a digital loan sanction letter.
Step 3: Document submission and verification
Once individuals have completed their Home Loan Procedure, they must submit the required paperwork. Here is a list of documents needed for the successful application of a home loan:
- Salaried individuals
- Identity, age, and address proof: KYC documents
- Employment proof: Employer-issued ID card
- Income proof: Past 3 months’ payslips and ITR statements
- Property documents: Original title deed and NOC
- Self-employed individuals
- Identity, age, and address proof: KYC documents for identity verification
- Business proof: More than 5 years of operational business documents
- Income proof: P&L and ITR statements
- Property documents: Original title deed and NOC
Upon submitting all aforementioned documents, lenders verify whether said documents are genuine or not. Furthermore, they may also ask borrowers to provide additional documents if required.
Step 4: Applicant’s legal and technical verification
Lenders examine various aspects of borrowers, such as:
- Repayment capability to ensure borrowers can successfully repay the loan amount within the repayment tenor.
- Assessment and examination of all details and information provided in application form.
- Analysis of CIBIL score and credit history to determine trustworthiness and risk involved.
Here are a few important reasons why lenders may reject your home loan application.
Step 5: Property assessment and verification
Lenders hire various specialised personnel to evaluate various aspects of the property in question:
- Age
- Location
- Ownership
- Current market valuation
- Upkeep cost
- Legal clearances
If a property is under construction, then lenders evaluate these aspects:
- Project’s location
- Stage of construction
- Construction and build quality
- Progress and pace of work
Here are a few home loan tax benefits for under-construction property.
Step 6: Loan approval and sanction
This type of loan typically involves borrowing a large amount of money, which is then repaid over a long period of time, often 15 to 30 years. The housing loan interest rate can vary depending on factors such as the borrower’s credit score, the loan amount. The final stage is where lenders approve the house loan, thus, crediting the loan amount to their borrower’s account. Here is how the Home Loan Procedure ends:
- Attorney-approved legal loan agreements are made on stamp papers.
- The borrower must sign the loan agreement.
- Once the agreement is signed, the loan amount is credited based on the disbursement type agreed upon, i.e., instalments or lump sum.