The Home Loan Process Unveiled: A Step-By-Step Guide

One can apply for a home loan to buy any residential real estate property or house. There are several financing institutions offering home loans at attractive interest rates. The entire home loan process can be a bit confusing thus one can go through a comprehensive guideline mentioned below.

What are the steps to apply for a home loan?

Below are the steps of the home loan process in India:

Step 1: Fill up a loan application form

A home loan procedure starts by filling out an application form. One will need to provide a few details about themself like name, residential address, educational information, property details, employment details, etc. An applicant needs to attach some of the home loan process documents with the duly filled application form. 

Step 2: Pay a processing fee

After an applicant successfully submits the duly filled form along with the documents attached, he or she needs to make the processing fee payment. The lenders levy this charge for maintaining one's loan account. The processing fee charged by the lender can go up to 7% of the requested loan amount.

Step 3: Evaluation of documents

A lender will stringently go through the filled form along with all the attached documents and verify it. This process takes one to two days; afterwards, the officials of the lending institution can arrange a discussion with the applicant. An applicant must not submit any fake papers to the lending party as it can make their application rejected. 

Step 4: Loan approval process

This stage of a home loan procedure is one of the most crucial stages. After conducting an in-depth check of the submitted documents, a lender will decide whether the loan will be approved or not. If every document is correct, then the approval process does not take much time. Afterwards, a lending institution will finalise and convey the maximum loan amount. 

Step 5: Processing sanction letter

A financial institution will provide a home loan sanction letter including the details of the sanctioned loan amount, interest rate, tenor, mode of repayment, etc. Afterwards, a borrower has to submit an acceptance copy to the lender. An acceptance copy is nothing but a duplicate copy of an offer letter signed by the applicant.

Step 6: Property paper/legal check 

After an individual accepts the offer letter, the lending institution will go through the property which one will buy. Henceforth, an applicant must submit a few documents related to the property like the owner's name, property name, address, NOC, etc.

Step 7: Technical check & site evaluation

Following the legal check, the lender will send experts to physically check the applicant’s property premises. This technical check is conducted to determine work progress, the building’s age, property valuation etc. Afterwards, a lender will evaluate the property’s value and get a site’s estimation. 

Step 8: Sign the loan agreement

The financing institution will finalise the registration of the home loan deal by making loan documents, and drafts, and have them stamped and signed both. Afterwards, the borrower needs to sign the agreement paper followed by submitting post-dated cheques for the initial 36 months or the duration agreed upon.

Step 9: Loan disbursal 

Following the signing of the loan agreement, lenders disburse the loan amount into the bank account of the lenders. In case a borrower is sourcing more funds from outside, then they need to submit the evidence. 

Several lending institutions provide pre-approved loan offers to existing borrowers. These offers apply to products like loans against property, home loans etc. Interested individuals can enter their names, etc. to check their eligibility. Doing so hastens the loan approval process for existing customers.

A homeowner must carefully evaluate all aspects of the home loan process, since it is a long-term commitment. They must repay the amount on the due dates otherwise the lenders can sell off their pledged property and recover the loan amount.