Buying a new residential property involves a substantial investment, and individuals might find themselves looking for financial assistance to fund the associated expenses. A home loan comes in handy during such circumstances.
In order to get a loan approved, individuals need to meet all eligibility parameters set by their preferred lending institutions. Here is a step-by-step guide to the home loan process. Read on to know more about the same.
Step-wise guide to apply for a housing loan in India
The stages involved are as follows:
- Home loan application process
Willing borrowers need to visit the official website of their preferred lenders and select the home loan application form option. Following this, an applicant will have to fill up the application form with all the necessary details along with the documents required by the lender and submit the application form.
- Paying the processing fees
Paying the home loan processing fee is the next step after submitting the application. However, processing fees tend to vary from lender to lender. A home loan’s processing charge typically ranges from 0.25 to 1 percent of the principal loan amount. This processing fee is a one-time sum that a financial institution collects to keep the borrower’s loan account active. The processing charge is always subject to negotiation with the lender.
- Negotiating with the lender
At this stage, an applicant can negotiate the terms of a home loan with the financial institution. For example, if an applicant wants to reduce the current home loan interest rate, he/she can request the same from the lender. Some lenders may ask a borrower to visit their branch in order to discuss the loan terms, and other specifics.
- Document verification process
A lot of candidates seek financial assistance to fund their property-related expenses on a daily basis. To expedite the entire application procedure, one must keep the documents required for a home loan handy and submit them as and when asked by the lender. Documents such as residential address, employer details, employment details, etc., are verified by a lending institution.
- Home loan approval
If a lender approves an application after thorough verification, the loan amount is sanctioned in as per an applicant’s eligibility. However, before approving a loan, a lender carefully examines an applicant’s financial history and creditworthiness, including bank transactions, income, employment, and his/her repayment capabilities. A lending institution can reject a loan application at this stage, if the documents do not fit the policies of the company.
- Offer letter and other checks
Once a lender sanctions an application, they send an offer letter to the borrower along with all details, such as home loan amount, rate of interest, repayment tenor and other terms. A lending partner can also conduct several other checks related to the property and then disburse the loan.
- Home loan agreement and disbursal
After the offer letter, an applicant will receive an agreement which they have to sign in order to receive the home loan amount. Once the lender gets hold of the attested agreement from the applicant, they will disburse the home loan amount.
That said, if you are planning to apply for a home loan, you must also know the beneficial aspects of this credit facility. Some of these benefits are as follows:
- You can opt for a home loan balance transfer option, in case you get a better deal.
- You can also claim home loan tax benefits under Section 24b, 80C, 80EE and 80EEA of the Income Tax Act of 1961.
Willing borrowers should also check their pre-approved offers extended by the leading financial institutions. These offers expedite the entire home loan application process and help in fast loan disbursals.
Now that you know the home loan process, choose your desired loan provider and own your dream home.