Getting a Home Loan in India

Decided on your dream home and now have to raise the funds? Fortunately bank loans are not as difficult to get as they used to be. It’s still a slightly long process, but then it’s always better to know that everything has been checked thoroughly rather than keep having to run around every three or four months. Here are the steps to go through:

1. Application

You need to fill up an application form which will ask for your basic information such as address, employment details, income, education and so on. The form will also ask for the property details like estimated costs etc. They will also ask you to submit verified photocopies of certain documents such as

Income proof

Age proof

Identity proof

Address proof

Employment details

Proof of educational qualifications

Details about the property if finalized

Bank statements

These are for security-both yours and the bank’s.

2. Processing fees for home loans in India

An important thing to note about home loans is the processing fee. Banks charge a processing fee for every home loan application. This fee is nonrefundable. The processing fee varies from bank to bank and is generally between 0.25% to 0.50% of the loan amount. This fees is used by the bank to start and maintain the home loan process including completing the various formalities during the entire period.

3. Evaluation and Verification

Once all your paperwork is in, it takes a few days for the bank back after going through your application and deciding your eligibility. If you pass this stage, field verification begins for which they send representatives to talk your family and neighbours as well as your colleagues to verify that the information you have provided is correct. The references provided in the application are cross checked and verified.

4. Repayment Verification

The bank now verifies your repayment capacity. After reviewing your credit records and bank account details, if convinced that you will be able to make payments every month, the bank sanctions your home loans. The sanction can be conditional or unconditional. If the sanction is conditional, you’ll have to fulfill the conditions imposed before the loan is disbursed. If they feel that you will not be able to pay back the loan, they will not sanction your loan.

5. Offer letter for home loan

The bank then prepares an offer letter which contains the following detail:

The amount of home loan sanctioned

The interest rate applicable on your home loan

Whether the interest rate is fixed or floating

Your home loan tenure

The mode of repayment of the home loan

If any special scheme applies to the home loan, its details

The terms and conditions associated with the home loan

If you find the offer attractive and agree with all the facts mentioned in the offer letter, you will have to provide an acceptance copy to the bank. This is generally a duplicate of the offer letter signed by you, provided to the bank for its records. If the bank charges any Administrative fee, it will have to be submitted at this stage.

6. Property Verification

The bank sends representatives to verify the property you are looking to buy. For this, you have to submit the original property documents. These include the title deeds, no-objection certificates and other documents. The bank conducts a legal check so as to verify that the property has a clear title and the home loan is being disbursed to the right person and for the right reasons. Banks don’t lend for disputed properties and for titles where ownership cannot be easily enforced.

[Source: http://www.midtownstructures.com/blog/getting-home-loan-india]