Steps Involved In Applying For A Home Loan
Buying a home is a dream-come-true moment for
many. But securing financing for the home is not easy. Most people fulfil their
dream of buying a home with the help of an external funding source like a home
loan. If you are a first-time home buyer, you might have several apprehensions
about applying for a home loan. Applying for a loan is daunting but the process
is pretty straightforward if you understand the steps involved.
We will
go through the steps involved in this article one by one.
- Fill out the loan application form
The first step is to fill out a loan
application form. The loan application form typically requires you to fill in
details such as personal details, residential address, monthly or yearly
income, educational information, employment details, property information, and
its cost, among other things.
- Attach valid documents
Income, identity, address, and age proof are
the few documents you are required to submit. You should also submit bank
statements and property details for which the loan is applied.
- Pay the processing fee
The next step is to pay the processing fee.
Banks typically charge a processing fee to process the loan application. The
fee ranges from 0.25% to 0.50% of the requested loan amount. Banks these days
offer zero-processing-free loans too. But check if there are any hidden terms
and conditions, like a higher rate of interest, stamp duties, etc., before
applying for one.
- Document evaluation and loan sanction
This is a crucial stage that determines
whether your loan will be approved. Documents such as residential address
(previous and current), place of employment, employer credentials, and
workplace and residence contact numbers are evaluated. The loan is sanctioned
after an in-depth examination of the applicant's credit score and his/her
ability to repay the loan amount. The bank determines the maximum loan amount
the applicant is eligible to receive post-verification of the documents.
The bank also conducts an independent
evaluation of the property. The document verification process may take a few
days to a couple of weeks. This varies from bank to bank.
- Processing the offer letter
The bank will issue a sanction letter or
offer letter if your application is approved. This document outlines the
approved loan amount, interest rate, tenure, and other terms and conditions.
Review the offer carefully and clarify any doubts before accepting it.
- Loan
agreement and disbursement
Once you accept the offer, you’ll need to
sign the loan agreement, which is a legally binding contract. After signing,
the bank will disburse the loan amount, either as a lump sum or in
installments, depending on the rules and regulations dictating the bank’s
policies.
These are the steps involved in the home loan
application process. Knowing about the stages beforehand helps you become
better prepared for the application process. It increases the chances of fast
approval of loans.
Article authored by: Team Bajaj Realty
Date: 13th August, 2024