A house loan is a secured loan taken out with a bank for the purpose of acquiring a home. A home loan can be used to buy a ready-to-move-in house, a flat or apartment, or a property that is still under construction. Banks and non-banking financial firms both provide home loan options. Different interest rates apply to them, which are typically linked to your credit score. Home loans are typically for a period of up to 30 years and must be repaid in Equated Monthly Instalments (EMI). You can deduct tax on both the principal and interest component of your house loan under Sections 80C and 24, respectively, of the Income Tax Act.
Home Loan Application Process
Below listed are the steps that you need to follow to apply for a housing loan:
Fill out the Loan Application Form
The application form is the first stage in the home loan application procedure. For this loan application, a few basic facts about the applicant will be necessary.
Attach Necessary Documents
After you’ve finished the official application, you’ll need to attach all of the valid papers that the bank demands to the application form. Income evidence, identity or ID proof, age proof, address proof, employment data, and bank account statements are commonly included in this package.
Payment of the processing charge
After completing the official application and document submission procedure, the applicant must pay the processing fee to the bank. This is the amount of money received to keep the applicant’s loan account current. Every year, it is necessary to transmit some secret documents (such as IT credentials, post-dated checks, and so on).
Valuation of the Documents
Keep in mind that millions of individuals apply for home loans every day, and the applicant must be honest throughout the procedure in order for the bank to accept the papers as swiftly as possible. Fake paperwork or fraudulent behaviour will not be accepted by the bank. It is a criminal offence with potentially serious repercussions. After the application form and supporting documents have been submitted and the processing cost has been paid, the bank authority evaluates them.
Evaluating Loan Applications
Approval or sanction is one of the most crucial steps in the home loan process. This might result in a positive or negative result. It all comes down to the bank. The chance of acceptance diminishes if it is unsatisfied with any of the applicant’s documents. The loan will be sanctioned or approved swiftly if everything goes according to plan.
If the application is approved, the bank will send a certified offer letter to the applicant.
The property paperwork is processed, and then a legal check is performed. Following the applicant’s formal acceptance of the offer letter, the bank concentrates on the residential that the applicant wants to buy. The applicant might request a time limit to pick one even if it hasn’t been completed.
The Final Loan Agreement
When the bank has finished the technical and site evaluations and the lawyer has cleared all of the papers, the agreement is finally registered. The loan documentation is completed, written, stamped, and signed by the bank’s lawyer.
Signing the Agreement
After completing the paperwork, the applicant must sign the home loan agreement. For the first 36 months or the duration agreed upon by both parties, he or she must furnish post-dated checks.
The Loan Disbursement
After the applicant signs the documents and everything is legal, the loan money is provided via check. The applicant must, however, first furnish the bank with a few crucial papers that will serve as his or her personal contribution to the property.
The above is the process through which you can apply for a Home Loan. However, it is advisable to always check your eligibility before applying in order to avoid rejection. Since multiple loan rejections can have an adverse effect on your overall CIBIL Score, it is important to check your home loan eligibility and apply for a home loan accordingly.