The popularity of home loans has increased considerably over the last few years. These days, most home loan borrowers avail of a home loan to help them realize their dream of becoming a homeowner. Home loans make it easier for home buyers to buy their dream home without worrying about paying the entire cost of the loan in one go. Further, home loans offer tax benefits and allow people to save considerably on taxes through the tenor of their loan. However, the home loan process can easily become daunting if you are not well-versed with it. In this article, we walk our readers through the home loan process.
Home Loan Application Process: A Step-by-Step Guide
1. Gauge Your Home Loan Eligibility
Most individuals think that the first step in the home loan application procedure is applying for a loan. This is wrong — before one applies for a loan, they must gauge their home loan eligibility. You may want to avail of a certain amount but your lender will decide whether you can avail of this loan amount or not based on factors, such as your income, age, CIBIL score, etc. Home loan borrowers are advised to initiate the home loan application process with a home loan eligibility calculator and figure out the loan amount they can borrow. Gaining this clear understanding at the beginning of the loan process allows one to apply for a loan amount they are eligible for and get approved for it quickly.
2. Choose Your Lender
These days, there is no dearth of lenders to choose from. Since home loans are a long-term commitment, home loan applicants must take their time to choose the right lender for them. Selecting the right lender means finding a lender who is not only willing to offer you a loan on beneficial loan terms and conditions but also someone who is experienced, has been in the market for at least a couple of years, keeps a customer-centric approach and is known to have a good name and reputation in the market.
3. Submit a Loan Application
After you have figured out the home loan amount you qualify for and found a lender who is willing to offer you a loan on the best-possible loan terms and conditions, the next step is applying for the loan. These days, home loan applicants can make a home loan application both online as well as offline. While submitting your loan application, your lender will ask you to submit a few documents, such as KYC and income-proof documents. These documents will help your lender determine your repayment capacity and design a loan plan that will work well for you. Alongside submitting these documents, your lender will also ask you to pay a one-time home loan processing fee during this step of the process. The home loan processing fee is non-refundable and is used to take care of expenses related to your loan application and account.
4. Wait for Your Lender to Respond to Your Loan Application
After you have submitted your loan application, depending on the lender you have chosen, you will hear on the status of your application within 24 hours to a few days. Some lenders are known for speedy approval while others take slightly longer to decide on a loan application.
5. Receive a Loan Offer from Your Lender
If your lender decides to approve your loan application, they will extend you a loan offer. This loan offer will contain important details, such as the loan amount they are willing to offer you, the loan tenor you will get to repay this loan amount, the rate of interest you will be charged on the loan, the interest rate type, etc. If you agree with the terms and conditions mentioned in the loan agreement, you will be required to send a signed copy of the agreement to your lender and they will take the process ahead. If you are not happy with the terms and conditions mentioned in the loan agreement, talk to your lender and initiate another round of negotiations.
6. Submit the Property Documents
If you agree to accept the loan offer, during the next step, you will be required to submit all the property documents. This will include documents, such as title deeds, no-objection certificate, etc. After you have submitted these documents, your lender will verify all the information and documents provided by you. This will be followed by legal and technical verification of the property that you plan to buy with the loan money.
7. Wait for the Final Loan Offer
If the property passes all the technical and legal checks, your lender will send you a final loan offer. This loan offer will contain all details pertaining to your loan. You must visit your lender’s office to sign this loan agreement. The final loan agreement cannot be signed online.
8. Wait for Your Lender to Disburse the Final Loan Amount
After you have signed the final loan agreement, your lender will disburse the loan money into your account and you can then complete the process of purchasing your home.
Applying for a home loan and getting approved for it becomes far easier when you are well-versed with the loan application process. Through this article, we have tried to give you a basic understanding of the process. However, do know that some steps of the process may vary from lender to lender. So, it’s best to talk to a representative of your lender and get an idea of the home loan application process before initiating the loan application process.