Owning a home symbolises stability and security. Purchasing your dream home is among your biggest financial and emotional investments. It is a dream many people hope to convert into a reality. Nevertheless, the rising prices of the real-estate sector made it challenging to achieve the goal. Thus, procuring a home loan has become a crucial step in this pursuit. If you’re searching for financial assistance to purchase your home, you can apply for a home loan with affordable monthly instalments and an option to select loan terms conveniently. A home loan EMI calculator will help you know whether the home loan plan you want to procure will have affordable EMIs. Apart from paying the loan balance, you also will pay the interest. Therefore, remember to check whether the home loan interest rate is reasonable.
The home loan application procedure includes multiple steps, and navigating via each can be time-consuming. Applying for it without mistakes is important because if there is any mistake, your application can be delayed and rejected. The article is your step-by-step guide to applying for a home loan. It offers valuable insights, letting you comprehend all the involved steps and manage your expectations efficiently.
Step-By-Step Guide to Apply for a Home Loan
Before applying for a home loan, it is vital to shop around and research. Consider factors like the home loan interest rate, the monthly EMI you will pay, the time needed to repay the loan, the down payment you can afford, etc. You can know the EMI amount via a home loan EMI calculator. Understand the hidden charges, loan options, interest rates, and involved paperwork, which will help you decide efficiently throughout the home loan procedure.
Here are the steps to apply for a home loan:-
Check Your Eligibility Criteria
The first step to applying for a home loan is to check the eligibility requirements. Analyse your financial condition, including your monthly income, age, co-applicant’s income if applying for joint loans, credit score, and current debts. Calculate your borrowing capacity, the maximum amount you can borrow depending on your income, assets, and debt. Use a home loan EMI calculator to know the monthly EMIs and check the home loan interest rate. To determine your borrowing capacity, loan providers consider your debts, monthly income, assets, and employment history.
Select Your Lender Judiciously
You have multiple options in India for getting a home loan, like banks, NBFCs, and other financial institutions. Every loan provider offers different interest rates, terms, conditions, and home loan processing times. Therefore, compare them meticulously. Choose your lender wisely, keeping in mind the following factors:
- The home loan interest rate
Fill Out the Application Form and Submit the Required Documents
To continue with your home loan application process, visit the official portal of your preferred loan provider and fill out the application form. You can also visit a bank branch and fill out the form. The application collects information about you, like your personal information, contact details, work, history, monthly income, employment status, education, and information about the residential property you wish to purchase. After filling out the application form, submit the necessary documents online and offline for verification. The documents include:
- Identification Proof
- Residence Address Proof
- Age Proof
- Education Qualifications
- Income Validation
- Business Documentation
- Property Information
Pay the Processing Fee
After filling out the application form, pay the processing fee to your lender. The processing charge is a non-refundable fee that a loan provider asks to begin the home loan process and keep your loan account active. The processing charge includes confidential documentation, like yearly income tax certificates and post-dated cheques. The processing fee varies from 0.25% to 0.50% of the applied loan amount.
Review and Verification
After receiving your application, your lender will review your application form and verify your documents. They may even conduct a meeting face-to-face to verify your furnished information. It helps them evaluate your loan repayment ability. When verified, they’ll continue with the loan approval process.
Loan Sanction and Approval Letter
If your lender approves your application, you’ll get an approval letter mentioning the loan amount, the home loan interest rate, and other terms and conditions. Even if your application is rejected, your lender will inform you of the reasons behind your rejection. Precisely read the approval letter, sign, and return the acceptance copy to your loan provider, acknowledging your agreement with the specified terms and conditions.
Legal Checks and Technical Inspections
After approving your loan application, your lender will examine the residential property you want to purchase. Legal checks and technical inspection of the property will ensure that the property is clear without conflicts or disputes. If you still need to finalise the property, request some time to finalise one. The loan provider will check the progress and construction quality if the property is under construction. Your loan provider will check the age, maintenance, and quality if it’s a resale property.
The home loan disbursal process begins when your lender completes legal checks and technical inspections, and the lawyer reviews your documents. The loan provider will disburse the loan after signing the loan agreement on the dotted line and submitting the pending documents. You will get a cheque in favour of the builder if you’re buying the property from a builder. The lender will prepare the Memorandum of Execution, after which the loan agreement will be stamped and signed, and finally, the loan amount will be disbursed.
The above step-by-step guide is a standard application procedure for a home loan across banks, NBFCs, and other financial institutions. Nevertheless, the procedure may vary based on a loan provider’s policy and your credit profile. Before applying for a home loan, comparing the home loan interest rate, choosing your loan provider judiciously, understanding the loan procedure completely, and using a home loan EMI calculator to know the affordability of EMIs are crucial. You must submit pending documents quickly and complete all formalities from your side once your loan application is approved because your lender will charge interest from the approval date.