A Complete Home Loan Guide For Application Process!
If you have landed here, you might be looking for a complete home loan guide. Well, don’t worry! We are here with the complete process that will help you in your loan journey. But before you jump to the process, you must be aware of the mortgage loan. A mortgage is a loan obtained to finance the purchase of a house. When you accept a mortgage, your lender lends you, the borrower, a specified amount of money in order to help you purchase a property. In exchange, you agree to return the loan in monthly installments over a certain time period — often 15 or 30 years. Bear in mind that some individuals use the phrases “mortgage” and “home loan” interchangeably.
Step 1: Submit an application for a house loan
A Home loan guide application begins with a formal submission to the bank. Additionally, you must offer your personal information for the bank to evaluate and determine your loan eligibility. Generally, banks will require the following documents:
- Validation of identity
- Address Verification
- Proof of age
- Proof of educational/ professional qualifications
- Employment details
- Bank statements
- Proof of income
- Pan Card
- Property details (in case it is finalized).
Step 2: Pay The Transaction Fee
After completing the official application and document submission process, the applicant must pay the bank’s processing fee. This is the money collected to keep the applicant’s loan account in good standing. It entails submitting some secret documentation (such as IT credentials and post-dated checks) each year.
Typically, a bank’s processing charge is as follows:
Ranges between 0.25 and 0.50 percent of the loan amount sought.
If an applicant applies for an Rs. 15 lakh house loan, the processing cost will be Rs. 3,750 (at a 0.25 percent rate) and Rs. 7,500 (at a 0.50 percent rate).
The bank then pays a commission to the agent handling the applicant’s home loan guide application, which is deducted from the processing fee paid by the applicant. Though the majority of banks have a reasonable charge structure, it is negotiable. There is no offense in attempting to negotiate the processing price.
Step 3: Consultation With The Bank
After the applicant has finished the application and paperwork procedure, he or she must wait for the bank or financial institution to verify the documents. It often takes between 1-2 days, or even less, if all documentation is filed correctly.
However, the bank may require the applicant to pay a visit to the bank for a face-to-face conversation prior to sanctioning the loan. This is done to gather further information about the application and to determine if he or she will be able to repay the loan plus home loan fixed interest rates.
Step 4: Examination and verification of the applicant
After you submit your application and payment of the processing fee, the bank will analyze your case and determine your eligibility for the loan.
You will be asked to meet with bank officials directly, normally within two to three business days after filing the application, in order for them to assess your repayment capacity.
Following the human meeting, the bank will check all of the information and documentation you supplied in your loan application. Bank staff will conduct on-site visits to your place of employment and housing to verify the information you submitted in your application.
Step 5: Letter of the offer for a home financing
At this point, the bank draughts an offer letter that includes the following information:
- Amount sanctioned
- Home loan fixed interest rates, fixed or floating
- Term of the loan
- Repayment method
- Exceptional scheme (if applicable)
- Loan terms and conditions
If the terms of the offer letter are agreeable to you, you must send a signed acceptance copy to the bank. A bank’s acceptance copy is simply a duplicate of the offer letter. The bank’s administrative fees (if any) must be paid at this step.
Step 6: Verification of property
The bank will check the property in issue prior to disbursing the loan. You will be needed to supply original copies of the title deed, a certificate of no objection, and any other papers requested by the bank. A legal examination of the property will be done to ensure that the title is clear and there are no encumbrances. The bank will also undertake a technical appraisal of your property. In the event of an under-construction property, the bank will examine the project’s location, stage, quality, and progress, among other factors, and will appraise the property using defined metrics.
When a property is ready to be sold or resold, the bank considers its age, ownership, construction quality, maintenance history, location, and legal clearances. Bank-employed property appraisers determine the property’s worth based on predetermined factors and determine the loan amount to be sanctioned.
Please keep in mind that your house loan is a secured loan, using the property as collateral. As a result, you will receive your papers only when the complete loan amount has been repaid.
Step 7: Loan Disbursement
After the applicant signs the documents and everything is legal, the loan money is disbursed through a check. However, the applicant must first provide a few critical papers to the bank, which will serve as his/her personal contribution to the house property.
If the applicant is attempting to raise additional funds from other sources, further documentation must be presented. The bank will then issue the loan’s partial payout. The vendor, development/society authority, or builder is always named on the check.
Nonetheless, there may be a few outliers. If, for example, the applicant has made an extra payment from his or her own account, the applicant will get the check immediately from the bank.
Take care not to postpone the home loan guide procedure following approval since every day counts in this situation. Home loan fixed interest rates. begin to accrue the day the loan is sanctioned. Thus, each and every day is costly! As a result, guarantee that the check is drawn on the specified delivery date. Avoid extra interest charges.
Applying for a mortgage for the first time might be stressful if you are unfamiliar with the process. Whether you’re acquiring a starter house or a lifetime home, homeownership is a significant milestone. After reading our mortgage guide, you may take measures to ensure that you’re prepared to apply for one, boosting your chances of securing a favorable home loan with fixed interest rates. Regardless of the sort of home loan guide you’re considering or the amount you wish to borrow, browse around for the finest mortgage lenders and allow sufficient time to complete the procedure. A little patience may make an otherwise traumatic task far less so.