It is the innate desire for several Indians to be homeowners. Many people consider buying a home as a milestone event of their life. For some it is an important step in ensuring the financial security of their family. However, buying a home requires careful planning.
Firstly, you find the right home that suits the specific needs of your family. Secondly, you must make arrangements for the funds to pay the down payment. Finally, you must find the right lender to avail home loan. Nowadays, many lenders in India, be it banks or NBFCs (Non-banking financial companies) offer home loans at competitive interest rates
Apart from the planning, you must be aware of the home loan application process. If you are a first-time borrower, there is a step-by-step guide that would help you through the process.
- Fill the form
Just like applying for any other credit, the first step in applying for a home loan is filling the application form. It is a basic document wherein you provide personal and financial information. Make sure that you carefully fill the details with relevant information and if you don’t understand anything, don’t hesitate to get in touch with the loan officer to clear your doubts. Also, make sure that you are honest in giving out your details and never give out false information about anything in the form.
- Complying with the documentation
When you apply for a home loan, you must comply with the KYC (Known your customer) documentation. It is an inherent part of the home loan application process. You must submit specific documents like identification proof, age proof, residence proof, income proof, etc along with your application form.
The lenders then verify these documents to assess your eligibility and decide the maximum loan you can borrow. Today, with the online home loan application process, complying with documentation has become much easier than ever before.
You can go through the lender’s website and know about the necessary documents beforehand and keep them handy while filling the form. You must upload the documents on the lender’s portal. This significantly reduces the hassles of handling the physical copies of the vital documents and there is zero risk of losing the papers in transit.
- Background check
Once you submit the application form and the documents, the lender will conduct a background check of the information you provide. They may verify your occupation, residential and office address income, etc.
- Paying the processing fee
After the lender is convinced that you have the financial capacity to repay the amount, they will start processing the loan. At this stage, they will require you to pay the processing fee, which is about 0.50% of the loan amount or Rs. 3000, whichever is higher plus the applicable taxes. It is a mandatory charge and it must be paid upfront.
- Approval process
The most crucial stage in the home loan application process, at this stage, the decides whether to approve your loan or reject. To avoid rejection, make sure that you duly submit all the relevant documents on time. At this stage the lenders also decide the maximum amount you can borrow and the rate of interest for the duration you want to borrow. The lenders usually communicate these details through a sanction letter that confirms your loan approval.
- Property documents verification and disbursement
After you receive the sanction letter, you must give your acceptance to the lender within a specific period. And, at this stage, the bank will verify the authenticity of the property-related paper and if all is well and is within the lenders’ legal parameters, they will disburse the loan.
But before the lenders forward the amount, you must sign the loan papers and confirm that you agree to the term and conditions.
Thus, applying for a home loan entails a meticulous process. And you must go through every step before finally you get the amount.