If you are a first-time Home Loan Applicant, the entire process of Home Loan can seem to be monstrously daunting. And rightly so! But if you know about the steps involved, it becomes far more comfortable. Here are seven of the steps of how to apply for home loans –

  1. Application Form & Document Submission
  2. Personal Meeting
  3. Bank’s Field Investigation & Credit Appraisal
  4. Offer Letter & Legal Documents Submission
  5. Valuation & Property Documents Registration
  6. Final Agreements
  7. Disbursement Of Loan

You can avail a low-interest home loan by using financial services like Chqbook that maintain some of the largest listings of Home Loans in India, starting as low as 8.35%.

If you are looking to lower the interest rates on your already existing Loans, you can opt for a home loan transfer. It is also known as Refinancing or the Balance Transfer. Most individuals use this option to get the benefit of the lower interest rates on the Home Loans that are prevalent in the market at the time.

Now that we have had a birdseye view of the process, let’s dive into the details and learn more about what you might encounter during the Home Loan process.

  1. Application Form & Document Submission

The first step in applying for a Home Loan is filling up the application form. Different banks have their own unique forms but almost all the information required is common and just 20 percent of data is unique. This consists of your Personal and Professional details, your financial liabilities and assets. It also consists of details of the property that you wish to buy, including the estimated cost as well.

In the process of Home Loan applications, every bank is required to seek certain documents. They are as following –

  • Proof of Identification: A copy of an Identity proof such as Driving Licence, Aadhar Card, PAN Card, Passport etc. Any acceptable proof of identity with a photograph can be used as an Identity proof.
  • Proof of Age: Documents such as School Certificate, Passport, PAN card, Voter Id, Driving license etc., are accepted as proof of age.
  • Proof of Address: Documents specifying your correspondence and permanent address require that reflect your current address.
  • Details of Employment: A short summary of the company profile is required. It should tell about the business of the company, its industry, its customers, its relevant competitors, number of employees, its yearly turnover and profit.
  • Income Proof: Income proof is extremely important and it needs to be backed by copies of Income Tax returns for the last three years Income Tax returns, Form 16 or Form 16A, Monthly salary slips from last three months, Bank statements from all your active accounts for the last 6 months.
  1. Personal Meeting

After the application process is successfully completed, some banks might insist on conducting a Personal interview before they sanction the Home Loan. This is done to gather your details that might otherwise not be available in the application form. However, these days, this step is insisted in only rare cases.

  1. Bank’s Field Investigation & Credit Appraisal

However eager the banks are to complete their targets of loans, each one has a risk involved with them. Thus, Banks make sure that all the details provided to them are validated and stand their ground. A thorough background check is performed involving your personal and professional life to help establish trust between you and the bank.

A credit appraisal is performed and the home loan provider establishes your home loan eligibility on the basis of Income, Employer, Age, etc. and based on these the Home Loan Sanction is carried out. A sanction letter is thus issued by the bank for the loan disbursal.

  1. Offer Letter & Legal Documents Submission

Based on the Home Loan eligibility the bank sanctions the loan and sends an offer letter with the following details:

  • Loan Amount
  • Interest Rates
  • Whether Fixed or Variable Rates of Interest are offered
  • Loan Tenure

Once you have selected the desired property, you must hand over all the original documents related to the property to the bank. These are kept as security for the loan amount to be disbursed to you.

  1. Valuation & Property Documents Registration

Banks and other Home Loan Providers have to be extremely cautious about the property they are going to finance. They might perform site visits to determine scores of factors that might influence the valuation of the property.

If the property is purchased from a reputed builder directly or if the property is pre-approved, valuation issues rarely become a bottleneck. In such cases, home loan providers would have already finished their valuation and thus it would be safe to assume that there are no discrepancies between the documented cost and the valuation of the property as performed by the bank.

  1. Final Agreements

After the Document Registration and Valuation checks are completed the documents drafted by the lawyers are finalized, signed and stamped. Also, make sure that any pending NOCs should be obtained in the bank-approved formats.

  1. Disbursement Of Loan

Borrower(s) must sign the Home Loan agreement. Post-dated cheques for the first few months (as described in the agreed mode of repayment) are then submitted along with the original property documents.

After the entire process is completed and all the loan agreements have been executed, the Loan amount is finally disbursed in the name of the seller, builder, or the development authority.

Chqbook promotes the use of its vast resources of financial knowledge to help its customers make the best financial decisions possible. If you are a first-time home loan applicant, you might find these steps and documentation tiring. You can use Chqbook’s definite checklist for the first time Home Loan applicants to find your way. In any case, keep on researching and let Chqbook experts help you in the meanwhile.