Buying your own home, whether for the first time or subsequent times, is an exciting experience. Most people today buy a home with the help of a home loan. With home loan interest rates also becoming more and more affordable, and almost every major bank or other financial institution offering a wide variety of home loans with attractive features and other benefits, you may be considering applying for a home loan to make your dream home a reality. The first and obvious step to that is submitting a home loan application. You could be having many questions and doubts about the home loan application process. This complete guide to home loan applications will help answer all your questions.
There are usually four steps to every home loan application process. These are as given below:
Let’s take a look at these steps in some detail.
Applying for a home loan is now easier than ever with almost every bank or lender having an online presence or multiple branches in cities across the country. So you could choose to visit the nearest branch of your chosen lender or visit their website, obtain the application form, fill up the required details, attach or upload the required supporting documents, and then submit your application. If your documents are all in order, this should not take too much time.
The loan approval can be done in a few days or even hours, depending on the lender, if all the documents you have submitted are successfully verified. You will need documents to prove your address, identity, income, employment or other sources of income, etc.
Your loan approval also depends on other factors, such as your credit score, employment history, total liabilities, age, loan amount required, etc. A background check will be conducted by the lender to ensure that all the documents and details provided by you are accurate and genuine. If all these factors are favorable, then you can be assured that your loan approval will not take too much time.
The amount of loan that is sanctioned will depend on a number of factors, which are similar to the loan approval stage mentioned above. Sometimes the loan amount that is sanctioned may be lower than what you had applied for.
The loan amount sanctioned will depend on a number of factors that range from your credit score and job stability to your professional qualifications and repayment capability. Your age, employment history, income, etc., will all also play a crucial role in the lender’s final decision on how much loan amount will be sanctioned to you.
The loan sanction process may also involve a one-on-one interview where you could be asked a number of questions pertaining to your job stability or business stability, monthly expenses, income, etc.
When the home sanction letter is sent to you, it is a guarantee that you will be sanctioned the loan, but it does not mean that the funds will be transferred to your bank account right away. This letter will have a validity of six months. This means that you have 6 months’ time to hunt for the right property, if you have not zeroed in on one already.
This is the final stage of the loan application process. At this stage, you will be sent the loan documents to be duly filled in and signed by you and any co-borrowers, co-owners, and co-applicants. Before the loan amount is disbursed, you will have to submit the down payment, which will depend on the Loan-to-Value ratio of your home loan. This can go up to 20% of the cost of the property.
You will also have to provide the property documents which will be legally assessed by the bank or financial lender. These documents may include the property’s title deed and the NOC. After this, your loan amount will be disbursed to you and you can then make your dream home your own.
If all the documents and your eligibility criteria are in order, your entire home loan application process will be smooth, quick, and hassle-free.
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