Home Loan Process in India

Home loans have become one of the most popular ways of finance or funds to buy residential property or homes in India. For the purpose of availing this type of loan, one has to go through a Home Loan Process. Usually, it is assumed that the process is hectic and difficult but this is not true in any sense. One can apply for the home loan by following the below mentioned steps that are simple to follow.

Home Loan Process

 

Step 1: Self Assessment by the applicant

The applicant is advised to always visit the official website of the potential lenders or Housing Finance Company (HFC) or banks providing the loan before starting the actual Home Loan Process. The applicant must conduct a self assessment for various plans and schemes for house financing provided by different lenders and services along with the same and choose the best option for them. They must also check for the documents required during the process to remove any hassle in the future.

Step 2: Filing the Application for Home Loan

Once the applicant has self assessed every aspect and have chosen the bank from which the home loan will be taken, the next step is to visit the nearest branch of the lender bank. The applicants can avail the services of a representative that provides assistance throughout the home loan process. Nowadays, most of the banks provide an online application form that a person can fill in at the comfort of their office or home.  The applicant is required to fill in the home loan application form and the necessary documents are to be submitted along with it.

Step 3: Application assessment by Bank

After the application is submitted by the applicant, the next step is home loan application assessment by the bank. The bank examines and evaluates each and every aspect of the application and check for the applicant’s eligibility for the further home loan process. The bank has to consider the following factors and information-

  • Applicant’s income
  • Age
  • Nature of work or job
  • Job security or stability
  • Number of dependents on the applicant
  • Repayment capacity
  • All the existing or current liabilities

Along with the above mentioned factors, the bank or the lender also carries out a verification of the residence, office or place of business and the CIBIL Score of the applicant.

Step 4: Valuation of Property and Legal Verification

The next step in the home loan process is to conduct an independent valuation and legal verification process of the property or place the applicant wants to buy. This is done through the legal and compliance department of the lending bank. After thorough verification the department issues a legal verification report or title certificate to the bank, a copy of which can be requested by the applicant as well.  The bank also appoints a registered valuer to compute the market value of the home or the property.  Once the bank approves the property the application moves further.

Step 5: Sanction of Home Loan

After the verification is completed a home loan against property is sanctioned by the bank and a sanction letter is issued to the applicant. It is to be noted that there is a difference between home loan and loan against property and these two must not be confused as same. The sanction letter contains the terms and conditions and an agreement for the home loan, which the applicant has to sign. Along with the signed agreement, all the original documents are supposed to submit as well for completing the home loan process.

 Step 6: Disbursement of Loan Amount

The last step in the home loan process is loan disbursement. After the agreement for home loan is signed, the borrower has to finalize a date for registering the property with the seller. The borrower has to give a written request for disbursement or demand letter for the home loan amount. The bank or the lender issues a Demand Draft or a Banker’s Cheque for the registration of property.

Important Points:

  1. The original document of the property remains with the bank till the whole home loan process or loan tenure period is completed.
  2. It is sole discretion of the bank to approve the home loan.
  3. It takes around 10-14 days for the whole home loan process to complete.

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    Author: Anil Agrawal
    EZYBIZ India Consulting LLP, New Delhi. The firm is business and tax consultancy firm providing consultancy in Taxation, Regulatory, Transfer pricing, Valuation, Corporate funding and Business set up matters. He may be reached at 9899217778 or anil@ezybizindia.in.
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