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Every individual dreams of becoming a homeowner. It is a way of ensuring lifelong security that doesn’t come from living in a rented house. But buying a house is not an easy process. Whether it’s years of savings to be given as a deposit or finding a proper locality to invest, the method of buying a home is detailed. Since property investment takes the amounts of money, most of the individuals believe in apply for a home loan. You will take out a home loan and pay it off in easy equated monthly installments (EMIs) for tenures lasting up-to 30 years.
The process to apply for a home loan in India involves several steps, which before the digitization of banking were complex and time-consuming for applicants. Today, the home loan procedure isn’t only easy but also quick. Your loan is often disbursed within every week.
Here is a step by step guide to Home Loan Application Process:
Fill the application form:
The process for making the home loan starts with filing an application form. The application form is the most elementary document where you have to fill your personal information about your name, address, telephone number, occupation, monthly and annual income, and education details, etc. The borrower should also give the details about the property he would like to get, the estimated cost of the property, and the affordable deposit. The borrower needs to furnish the id proof, address proof, income proof, income certificates, ITR of last three years, bank statements, etc, together in the form.
Verification of documents:
After you submit your documents, the bank verifies the documents provided by you. This is often a crucial aspect of the home loan process and banks may take up to 2 days to verify your documents. During this point, you’ll even be asked to go to the bank and appear for a face-to-face interview. This is often the bank’s way of confirming that you simply are capable of repaying your loan within the required tenure.
Banks verify your documents and also conducts an independent background check of the borrower’s credentials. To this effect, the bank may conduct an investigation basis the data given by you in the form including your previous and current residential addresses, your employer, credentials of your employer, office contact details, etc.
Obtaining your credit report:
This process has simplified ever since RBI made it mandatory for credit bureaus to provide their customers with a free credit report annually. Any credit score above 750 is considered good and is a sign of how consistent a person has been with paying off previous loans.
Pay Processing Fee:
Your bank will charge you a non-refundable loan-processing fee. Most banks charge between 0.5 percent and 1 percent of the loan amount as processing fees. Banks use this amount for commencing and maintaining the house loan process. Lately, some banks have taken to waiving loan-processing fees to attract borrowers. You should negotiate together with your bank and check out to avail of the benefit. However, not all banks are going to be hostile towards the processing fees.
Evaluation of Repayment Capacity:
Verification of the borrower’s repayment capacity is the most vital part of the home loan process. The bank may sanction or deny your home loan request counting on how satisfied it is together with your ability to repay the principal (with interest) on time. Just in case the bank issues a conditional sanction, all the stipulated conditions will need to be satisfied before the loan is disbursed.
Processing the property documents:
After you receive the official sanction letter approving your loan, you’re required to submit the first property documents to the lending bank, which remains within the bank’s custody until the loan is repaid fully. The original property documents typically include the entire chain of ownership acquisition and transfers of ownership in sequence till your Sale Agreement execution, applicable NOCs from related authorities alongside the seller’s name, ID and address proof, etc. The bank verifies all the related property documents before approving the loan. Bank also sends it’s representative twice to physically visit the property site, once before approval of the loan then after sanction of the loan.
The final step within the entire housing loan procedure is that the loan disbursal stage. This includes the registration of the loan deal i.e. acceptance of Terms and conditions of Sanction by the borrower/s, the signing of the loan agreement/documents, and therefore the disbursement of loan as per terms stated within the Sale Agreement, including down-payment by the lender.
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