Every individual dreams of buying their own home. Becoming a homeowner provides a sense of long-term security that can’t be ensured by living in a rented home. However, buying a home is not easy, specifically when you have limited funds. So it is when an instant home loan comes into the picture.
A home loan is the total amount of money lent by financial institutions to the borrower to purchase a home. Applying for a home loan is the first step you can take to buy your dream home. Due to digitization, the home loan procedure has become hassle-free and quick. This article talks about a step-by-step guide to the home loan application procedure.
Complete the home loan application form:
The first step in applying for a housing loan is filling out the application form. The home loan application form is the elementary document where the applicant must fill in his personal information such as name, address, contact number, e-mail address, occupation, monthly or annual income, current assets, educational qualifications, work opportunities, and so on.
Apart from personal information, an applicant also needs to provide details about the property he is thinking of buying, the estimated cost, and the affordable deposit. In this modern world, digitization has made it possible to fill out home loan application forms online.
1) Attach all the valid documents:
Once you have filled in all the required details in the home loan application form, you will need to attach the required mandatory documents. Here is the list of documents required for a home loan:
- Proof of Identity (Aadhaar Card, PAN Card, Driving License, Passport, or any other valid document)
- Proof of Address (Aadhaar Card, PAN Card, Driving License, Passport, Utility Bills, or any other valid document)
- Income Proof (Bank statement, ITR, or any other valid document)
- Age Proof (Aadhaar Card, Birth Certificate, Passport, 10th certificate, or any other valid document)
- Proof of Education (school mark sheet, diploma or degree, certificates, etc.)
- Employment or business details (Employment proof, balance sheet, profit and loss statement, proof of business address, business license, and any other valid document)
- Details of the property on which the credit is applied
2) Paying the processing fee:
Once you have submitted the Housing loan application form and required documents, the bank might request a processing fee. Many banks charge a non-refundable processing fee between 0.5% and 1% of the approved loan amount.
The banks use the processing fee to commence the home loan application procedure and maintain the account balance of the applicant. Many banks have waivered home loan processing fees in the past few years to attract borrowers. You can negotiate for the same with your bank and reap maximum benefits.
3) Verification of documents:
After you have submitted all required documents, these are verified by the bank. Now that this is the crucial aspect of the House loan procedure, verifying all submitted documents can take two or more days. Then, a Bank representative asks you for a face-to-face interview or even visits your home and workplace to validate the information provided in the home loan application form. At times, the references listed by you in your home loan form are also checked by the banks to establish trust between both parties.
4) Background and credit report check
The independent background check of the applicant’s credentials is conducted by almost every bank, especially if the borrower is a new customer. The bank conducts the background check investigation based on the data provided by an applicant in the home loan application. For example, the data can include your previous or current residential address, workplace contact details, your employer and his credentials, and so on.
Also, the Best home loan procedure involves checking the borrower’s credit report. Your bank might ask for your credit score and detailed credit report from authorized credit bureaus. A person with a credit score of 750 or more is considered good as it shows that he has consistently paid off his previous loans.
5) The sanction letter and acceptance copy:
Once all your documents have been verified and your credit score is known, the bank will provide you with a sanction letter. The letter of sanction generally holds the following points and subpoints:
- The sanctioned home loan amount
- Interest rate and type (Try to get the Cheapest home loan with lower interest)
- Tenure of home loan
- Repayment method
- Home loan terms and conditions
- Other details like home loan policies
Once the applicant accepts the sanction letter, he is asked to sign a copy of the acceptance and return it to the bank. The copy of the acceptance is just a duplicate copy of the sanction letter.
6) Processing the property papers and conducting a legal check:
The lender always makes sure to verify the mortgaged property before the approval of the loan amount. Once the applicant finalizes the property, he must submit all original documents of the property to the bank. The best home loan lenders will need an original document of the property title, certificate of no objection, certificate of encumbrance, and other relevant documents to conduct a legal check to ensure that the property title is clear and there are no legal disputes.
7) Disbursement of the home loan:
After successfully passing the preceding steps, an applicant will finally receive the final home loan agreement from the bank. Also, the borrowers need to show the cheques (post-dated) for the initial duration that has been agreed upon. Once the applicant signs the loan agreement and all the legal documents are good to go, the loan amount is disbursed via cheque.
An instant home loan is one of the most efficient ways to collect funds and purchase your dream home. Moreover, with digitalization in the banking industry, it has become easier and quicker to get a home loan. It is advisable to research thoroughly before choosing a particular financial institution for a home loan. Now that you are taking a home loan for the first time, you might be finding it difficult to apply for the same. Following these mentioned steps will make your home loan application procedure hassle-free.