Home Loan – Let's simplify how this will go about and what are the steps.
The first step involved in the process is to find your property, which is followed by the verification of property documents, post that the documents are examined. Simultaneously, you can start searching for the lender who can offer the best home loan deal after checking your eligibility criteria.
Know the Home Loan Eligibility:
Banks offer the loan amount based on your monthly income
and the value of the property. They will give you max amount in which your
EMI of home loan and others loans is 50-60% of your income. Other factor is
value of that property.
Select the Best Home Loan after evaluation:
Comparing home loan interest rates of various banks is the
primary feature in the home loan selection process. However, you should not
also forget to compare other fees & charges like application fees,
processing fees, legal charges of different loan offers. To check the
interest rates & other charges incurred by various banks, Deal4Loans has
brought in a Home Loan Comparison Chart across various government and
private banks. Banks offer fixed and floating rates in home loans.
Most customers choose Floating rates
Applying for the Loan :
After you have selected your lender, you have to fill in
the application form, wherein the lender requires complete information about
your financial assets & liabilities; other personal & professional details
together with the property details & its costs.
Documentation & Verification Process:
You are required to submit the necessary documents to the bank, which will be verified together with the details in the application
Credit & default check:
Bank checks out the borrower’s loan eligibility (through
repayment capacity) & the amount of loan is confirmed. The borrower’s
repayment capacity is reached, which is based on the income, salary, age,
experience & nature of business etc. Bank also checks credit history through
the Cibil Score, which plays a critical role in deciding & approving your
loan application. Low credit score implies that the bank upfront rejects
your application on the basis of earlier credit defaults; on the other hand
high credit score gives a green signal to your application
Bank sanctions Loan & Offer letter to the borrower:
After the credit appraisal of the borrower bank decides
the final amount & sanctions the loan, the bank further sends an offer
letter to the borrower, which constitutes the details like rate of interest,
loan tenure & repayment options etc.
Acceptance Copy to the Bank:
The borrower needs to send an acceptance copy to the bank
after the borrower agrees with the terms & conditions in the offer letter.
Bank checks the legal documents:
The bank further asks the legal documents of property from
the borrower to check its authenticity, so as to keep them as a security for
the loan amount given. The next step involved is the valuation of the
property by the bank which determines the loan amount sanctioned by the
Signing of agreement & the loan disbursal:
The borrower signs the loan agreement & the bank disburses the loan amount.
Documents required in Home Loan
Generally, the documents required to process your loan application are
almost similar across all the banks; however they may differ with various
banks depending upon specific requirement etc. Following documents are
required by financial institutions to process the loan application:
- Age Proof
- Address Proof
- Income Proof of the applicant & co-applicant
- Last 6 months bank A/C statement
- Passport size photograph of the applicant & co-applicant
|In case of Salaried ||In case of Self-employed |
|Employment certificate from the employer, ||Copy of audited financial statements for the last 2 years |
|Copies of pay slips for last few months and TDS certificate ||Copy of partnership deed if it is a partnership firm or copy of memorandum of association and articles of association if it is a company |
|Latest Form 16 issued by employer Bank statements ||Profit and loss account for the last few years |
|Income tax assessment order |