Home Loan Process
Taking a Home Loan is one of the key decisions of one’s life. The moment one starts thinking of going for a home loan there are a lot of fears/doubts that arises in an individuals mind. The different stages involved in the home loan process are explained below:
Stage 1 – Applying For A Home Loan
The process of home loans initiate with the filling of an Application Form. The application form asks for the personal, income, employment, educational details along with the property details, estimated costs and various means of financing the property. The requirements may vary from bank to bank but these are most common details asked by all the banks.
Duly filled application form enclosed with following documents has to be submitted to the loan provider:
- Income Proof
- Age Proof
- ID Proof
- Employment Details
- Educational Details
- Property Details (if finalized)
- Bank Statements
Stage 2 – Payment of Processing Fees
There is a processing fee for every home loan application and this processing fee is non-refundable. Generally this processing fees is between 0.25% to 0.50% of the total loan amount, though it may vary from bank to bank.
Stage 3 – Verification of the Applicant
Once the processing fee has been paid the bank evaluates the applicant for his loan eligibility. This involves personal meeting with the bank, the main purpose of the rendezvous is to know more about the borrower and judge his repayment capacity. After this personal interaction the bank proceeds to verify all the information provided in the application. A physical verification by banks representatives is conducted both at the work place and at the residence; also the references are also duly verified.
Stage 4 – Verification of the Repayment Capacity
After the physical verification is over the bank proceeds to judge the repaying capacity of the applicant. This is the most crucial stage of the home loan process. If a banks finds any kind of uncertainty it would simply reject your application. The loan is sanctioned only if the bank is well convinced.
Stage 5 – Offer Letter for the Home Loan
The offer letter highlights the following major terms of the loan:
- – Loan Sanctioned
- – Loan Tenure
- – Rate of Interest
- – Fixed or Floating ROI
- – Terms And Conditions
An acceptance with the bank has to be signed by the borrower.
Stage 6 – Property Verification
Being a secured loan the bank keeps the property document as a security or collateral. The following original document has to be submitted for this purpose:
- Title Deeds
- Other Related Documents If Any
Stage 7 – Loan Disbursement
The last stage in the long process is the much awaited disbursement stage. When all the legal, technical and financial valuation of the property is complete the registration process of the loan initiates. The legal documents are prepared on the stamp papers of the required denomination as per the banks requirement. The home loan is agreement is signed and the applicant has to submit the post dated cheques for the agreed term. And, thus as per the agreed terms the loan is disbursed (in lump sum or in stages).
Nowadays, the process is not that lengthy as it seems. The whole process can be completed within a period of one to two weeks only. So getting a home loan is not a hectic task these days.