Decoding Home Loan Sanction Letters: What You Should Know

If you are planning to apply for a home loan, you must know the difference between the home loan sanction letter and the final loan offer. People think the two are the same but that's not the case. 

The home loan sanction letter is a legal document that lenders release after a home loan applicant has successfully passed the document and property verification stages. The home loan sanction letter is not the final loan agreement. It is only a document that details the terms and conditions on which your lender is willing to offer you a home loan. In general, the home loan sanction letter contains details, such as the home loan amount that your lender is willing to sanction and the home loan interest rate and the home loan tenor they are willing to offer you. Other than this, the home loan sanction letter also contains details, such as the interest rate type that your lender is willing to offer you as well as any other terms and conditions your lender may have regarding your home loan. If a borrower agrees with all the terms and conditions mentioned in a home loan sanction letter, they are asked to sign the letter and send a soft copy of it to the lender. It is only after a lender receives a signed copy of the home loan sanction letter do they release the final loan offer letter. The home loan offer letter is the final loan offer from the lender. Borrowers must visit their lender's office to sign this letter and once they have signed the loan offer letter, the terms and conditions of the loan sanction letter become sealed. 

Once borrowers receive their home loan sanction letter, they must read all the terms and conditions carefully. Since the home loan sanction letter is not the final loan offer, if the document contains any details or loan terms or conditions that the borrower finds objectionable, they must discuss it with their lender immediately and have the terms and conditions removed from the home loan sanction letter. Usually, the language used in any home loan sanction letter is quite simple and therefore, one need not have an expert by their side to help them decode everything mentioned in their home loan sanction letter. However, if there is something mentioned in your home loan sanction letter that you do not understand, it is best to hire an expert and have them help you understand everything well so that you don't make any judgement errors. 

Borrowers must also always remember that a home loan sanction letter only shows a lender's intent of sanctioning you a home loan. A home loan sanction letter does not in any way guarantee that you will be offered a loan. It is only after you have the loan offer letter in your hand do you know for sure that you will be sanctioned a home loan.

In conclusion, the home loan sanction letter and the offer letter are two different things. Both are equally important documents and therefore, one must read both these documents carefully before signing them.