Building their own home is a dream that most Indians share. In fact, it is one of the most highly valued dreams too, and rightly so. With real estate prices rising and falling constantly, along with changing interest rates and banking policies, home buyers need to be especially careful while financing their homes.
Home Loans are pretty much a mandate today for engaging in a transaction that involves as much money as building or buying your own home. Here’s how the process of applying and disbursal of home loans work:
Home Loan Process:
Applying for a home loan:
By providing a formal application for a home loan, along with your personal details the bank will judge your eligibility for the loan that has been applied for. Click here to Understand Home Loan Eligibility. The bank will also require a whole set of documents including:
- ID Proof
- Address Proof
- Age proof
- Proof of educational/professional qualifications
- Employment details
- Bank statements
- Proof of income
- Pan Card
- Property details
Paying the loan processing fee:
For commencing and maintaining your home loan, banks charge a processing fee that usually amounts to somewhere between 0.25% to 0.50% of the entire loan.
Applicant scrutiny and verification:
This process involves the bank gauging the applicant’s ability to repay the amount that is being borrowed. This is based on the amount the applicant would like to borrow, as well as the value of assets that is in possession with the applicant. His/her regularity in the payment of previous loans that they were taken will also reflect on their eligibility.
After evaluation the bank will decide on the principle amount that they can grant as loan.
Drafting Home Loan offer letter:
if the bank is satisfied on all counts regarding who you are and your ability to make payments, they will proceed to draft an offer letter. It will contain details of the loan, such as:
- Sanctioned principle amount
- Interest rate charged
- Fixed or floating interest rate charged
- Loan tenure
- Method of repayment
- Terms and conditions
- Special schemes
A signed acceptance copy is then provided to the bank if the applicant finds offers acceptable.
Before disbursal of the loan, the bank will ask the legal documents pertaining to the asset in consideration to be turned over for inspection.
If all of the above mentioned processes have been cleared, then the Home Loan will finally be disbursed.
Every new business treats the customer as king. Hence, despite the long Home Loan processes that are usually involved in getting your own housing loans sanctioned, banks today go to great lengths to make sure that there is as little hassle for the customer as possible.
With the dawn of the internet age, the home loan application and disbursal processes are now being hosted online as well. This adds to the convenience factor to this process, which is previously considered long and harrowing, and plagued by constant red-tape.