There are three major stages to the entire process of procuring a Home Loan.
Stage 1: Before Applying for The Loan
The process of getting a Home Loan begins with research. Everything today is available online, or is just a call away.
The 3 things you have to do before applying for a loan:
- Check if you’re eligible for a Home Loan, using tools like a Home Loan eligibility calculator.
- Next, evaluate your credit or CIBIL score. For a Home Loan, your score needs to be a minimum of 620.
- Evaluate your property. If your loan amount is higher, your application will be rejected and you’ll also end up wasting the processing fee. Check for banks with reasonable interest rates for home loan, and read the terms and conditions carefully.
Banks offer a maximum of 80% of the value of your property, so make sure you have the remaining 20% covered.
Stage 2: Applying for the Home Loan
Now that you have selected the bank, either you can download their application form online or pick it up in person. Every bank has its own set of formalities. Here are the basic documents you’ll need along with the application form
- Income proof: You will have to submit the last 3 months’ salary slips.
- Identity, age, and address proof: you can use anything from this list—voter’s ID/driving license/Aadhar card/PAN card/passport.
- Processing charges for Home Loan: the fee charged is generally between 1-2% of the loan amount, but can go up to 3%.
You’ve now sent in your application form—the easy part is done.
Stage 3: After Applying for the Home Loan
Whether you will be sanctioned the loan amount or not will be decided during this step. Once a bank receives an application they do an extensive research on the individual.
Here are the steps usually taken by the bank:
- If you meet their eligibility criteria for home loan, the bank evaluates your application form and calls you for a meeting. Carry your original documents when you go.
- The next—and the most important—step taken by the bank is evaluating your credit score. If you’ve got a good score, the bank sends a qualified person to evaluate your property.
- Next you will receive an offer letter stating the approved loan amount, interest rate, EMI amount, mode of payment, and other terms and conditions.
- If you accept the offer letter, you will have to hand over all the original documents of the property, which will be returned to you on complete repayment of the loan.
- In case of a ready-to-live-in house, the entire loan amount will be paid to the seller; if it’s under construction, the bank will pay amounts as per the property deed.
These steps will help you take an informed decision, and help you overcome any roadblocks on the way.