Availing a home loan begins with how wisely you select and plan the repayments. If you seek a loan for purchasing a house, you need to first identify the property in the right price range that fits your exact requirements. Then, you will have to zero in on a lender who can offer you the lowest interest rates and the best possible terms which won’t cut deep into your pocket. Scouting for ideal loan deals requires time and patience. One also needs a deeper understanding of the numerous loan-related terminologies and the complete home loan process to make informed decisions while choosing the perfect loan offering.
A Stepwise Guide to the Home Loan Process
Here is a detailed look at what one can expect from the home loan procedure in India:
Step 1: Fill and Submit the Home Loan Application
The home loan process begins with submitting a request for availing the desired loan. You will need to fill out an application form online, which can be easily done through your lender’s official website. You will be asked to furnish personal and professional information such as your name, address; details of your employment, education, contact and so on.
Individuals will also have to attach relevant documentation to support the data they provide on the application as well as various other paperwork depending on their employment type i.e. whether they are salary-drawing employees or self-employed persons. Lenders usually call for the following set of documents:
- Latest salary slips of the last three months
- Proof of employment
- Income proof
- Form 16
- Bank statements for the past six months
- Income tax returns for the previous two years, etc.
The documentation requirements may vary with each lending institution. Make sure you verify and arrange them in advance to avoid unnecessary delays during home loan procedure. Moreover, when filling in your application form, enter all the details correctly ensuring there are no discrepancies that may stall your loan request.
Step 2: Pay the Processing Fee
Once you submit the requisite paperwork, you will need to pay the initial processing fee as set by your lender. This fee is non-refundable and is levied for the preliminary verification tasks to be carried out including examining the property’s value and ownership title. This cost may differ from lender to lender and usually ranges between 0.5% to 1% of your loan amount. It could also be charged as a fixed amount. In certain instances, lenders may even waive off the fee.
The processing charges may be taken in one go or divided into two stages wherein the first part is paid at the beginning of loan processing and the remaining amount during the disbursal stage. It must be remembered that paying processing fees in no way guarantees loan approval.
Step 3: Personal Discussion With the Lender
Based on their own policies and the Reserve Bank of India guidelines, lenders generally take up to five working days to determine whether to approve or reject your loan request. If you are a salaried applicant, they may call you for a face-to-face meeting or hold a telephone discussion to gauge your credit needs and ability to manage loan repayments. Likewise, in case of self-employed applicants, your lender’s representative may visit your place of work and confirm certain business details. Doing so allows the credit underwriter to evaluate your loan request in a better manner.
Step 4: Document Verification
Your lender will now conduct a thorough home loan background check and assess your loan eligibility. They will pull up credit records from credit bureaus like CIBIL to appraise your credit score. They might even send a representative to verify your current address and place of work, contacting your employer if needed.
Step 5: Home Loan Approval
At this stage, the lender will decide if they can grant your loan request. They could ask for additional documentation to complete the home loan verification process.
Step 6: Loan Sanction Letter
You will now receive a home loan sanction letter from your lender containing the loan amount to be sanctioned, the applicable rate of interest and type (fixed or variable), tenor and other terms. You are required to submit a signed copy of this letter showing your acceptance to the lender.
Step 7: Property Verification
Now the lender may undertake a verification of your property. This involves a legal check to see that the title is clear and free from legal disputes. The house must not be pledged for any other mortgage. In addition to that, your lender will carry out a technical valuation of the property to establish its market price. In case of an under-construction house, they will survey the stage, progress and quality of construction along with several other considerations. If it is a resale house, they will inspect its age, quality, neighbourhood, maintenance and amenities. You need to submit all the original property papers for safekeeping with the lender until the loan is fully repaid.
Step 8: Loan Disbursal
Once the formalities are complete and all the documents are in order, you will be called to sign the loan agreement. Soon after, depending on your preferred mode of disbursal, the lender may either issue a cheque for the sanctioned loan amount or transfer the funds into your account. The cheque may also be made directly in favour of the property builder or seller.
Following the disbursement, you will receive your repayment schedule. EMIs can be paid via standing instructions if you hold an account with your lending institution. But if your account is held with another bank, you will have to pay through the NACH mandate. NACH or Nationalised Automated Clearing House is a centralised payment solution that expedites transactions between banks or lending companies.
Understanding the home loan process and the actual requirements make your loan journey smoother and hassle-free. Further, borrowers must also consider post-disbursal services and customer responsiveness when choosing a suitable lender.
Compare leading lenders in the market before availing of a housing loan to ensure you get the best deal possible. One such lender is Bajaj Housing Finance, a 100% subsidiary of Bajaj Finance Limited. They are renowned for high service standards and typically address customer queries and concerns efficiently. Be it to for your application or query resolution, you can reach out through the Bajaj Home Loan Customer Care number, 02245297300, between 9 am to 6 pm from Monday to Saturday, or email firstname.lastname@example.org.