Home loan procedure

People, especially first time home-buyers are usually overwhelmed by the whole process of getting home loans. Home Loan procedure is unfairly perceived as complicated and difficult. Following are the steps involved in getting yourself a home loan, explained:

Step 1: Self Assessment:

Make sure that you are ready before you begin the process. By this, we mean that you should go through the checklist of documents that will be required. You can find the list on a website of a Bank / HFC (Housing Finance Company). Remember that you can apply for a Home Loan even if you have not finalized on the property. However, it will be simpler and faster if you have narrowed down your options to one so that you have the property documents ready.

Step 2: Apply for Home Loan:

The next step in availing a home loan is to either visit a branch of the bank or visit the website and place an enquiry so that a representative will get back to you. You can then fill in the Home Loan Application, submit the documents required and the processing fees.

Step 3: Assessment by Bank:

Once all the required documents are submitted, the bank will assess them and decide if and how much you are eligible for. Following are some of the common factors that bank consider while deciding your eligibility:

• Age
• Income
• Job Stability and Nature of Job
• Existing Liabilities
• Number of dependents
• Repayment Capacity

During this process of evaluation, the bank will carry out office, residence and CIBIL verification. It will also do other checks as well.

Step 4: Legal Verification and Property Valuation:

Legal Verification of the property of the property will be done through a lawyer of the Bank. The appointed lawyer will issue Legal Verification Report/ Title Certificate to the bank. A copy of this report can be requested for by the borrower. He/she must pay a nominal fee for this. A Valuer will be appointed by the Bank for technical assessment. This Valuer will fix the Fair Market value of the property making sure that the loan amount approved against the property is appropriate.

If the Bank has already approved the property that you have finalized, they may not find it necessary to carry out the legal and technical verification once again.

Step 5: Home Loan Sanction:

The Home Loan against Property will be sanctioned once the verification is complete. The Borrower will receive the sanction letter. Once this is received, the borrower can sign the Home Loan Agreement. The Home Loan agreement must be read through thoroughly since it contains all the terms and conditions. In this step of the process, the Borrower is expected to submit all the original documents, ECS, cheques and other undertakings according to the Bank’s requirements.

Step 6: Loan Disbursement:

The final step after signing the Home Loan Agreement is finalizing the date of Property Registration. The Borrower must coordinate with the Seller for this. At the same time the borrower may request the Bank for Demand Letter or Disbursement. The DD/Banker’s Cheque for property registration will be issued by the bank.

Points to keep in mind:

1. The service of representative of bank can be availed. The representative will hand hold you through the Home Loan Process.
2. During Home Loan Period, the original documents of the Property will be with the bank
3. Up to 90% of the Property value can be availed if the property value is less than 20 Lacs.
4. If property value is more than 20 Lacs than you may avail maximum loan equivalent to 80% of Property value subject to your repayment capacity evaluated by bank
5. You can apply for a home loan in the city that you are staying in or in the city that the property is situated at.
6. Many factors including the Potential borrower’s Perceived Risk Profile decide whether Home Loan is approved or not. Even if the borrower’s CIBIL Score is 750 does not mean that Home Loan approval will be guaranteed.
7. The bank can decide whether one’s Home Loan is approved or denied.
8. Registration cost and Stamp Duty will not be included in property. HFC on the other hand does include the Registration cost and Stamp Duty in Property value.
9. It may take as much as 10-14 days for Home Loan Process to be completed