Home loan procedure
Owning a home is an important thing in life. This is a long cherished dream for many. These days there is a big increase in property prices in India. So, buying a house with one payment is difficult for many people. That’s why many people are looking for a home loan and it makes the home buying process easier. Many nationalized and private banks offer housing loans. There are also some home finance companies in India that offer home loans. In India, the home loan procedure involves several steps. It can be a small process for few people if they have all the documents needed in the process. For others, it will be a long process.
Home Loan Procedure in India
Choosing a home loan
While choosing the best home loan plan, you need to do a lot of research and find out which home loan plan suits your needs best. Understand your financial situation for the next few years so that you have a rough idea of your resources in the coming years and choose the housing plan that suits you.
Submit an application form
Once you know the plan you need, you need to submit the application form to the bank. You will also be asked to submit some relevant documents along with the application form. These documents may differ for different banks. These documents are used to verify your income, age, residence, employment and much more. At this stage, you must pay a loan processing fee to the Bank. This processing fee is non-refundable. This processing fee will be around 0.5-1% of the loan amount.
After you submit the form and the relevant documents, the bank will start validating the information provided by you in the application form. The bank will check your address of residence, place of work, etc. The bank performs a number of checks to ensure that you will be able to repay the loan amount.
Issuance of letter of sanction
After these checks, the bank issues a sanction letter. This letter contains details such as loan amount, interest rate, monthly reduced balance, method of repayment and general terms of the loan. This is the approval of the procedure for lending money from the bank. But the money will be sanctioned only after a thorough verification of the documents and the property for which the loan is granted.
Submission of documents
After receiving the sanction letter, you have to leave the entire set of original documents of the purchased property with the Bank as a guarantee for the sanctioned loan. The bank will have all these documents until you pay off the loan in full. After you provide the documents to the bank, they will check all the original documents.
At this stage, the Bank carries out a site visit to your property to ensure that there are no construction violations. Once the bank confirms that the property is legally and technically clean, and if it is satisfied with the property, it will disburse the loan amount.
Registration of ownership and signing of contracts
At this stage, the registration of your property takes place. And now it’s time to sign the final home loan contract. After you sign the agreement, you must deliver a bunch of post-dated checks as agreed in the agreement document.
After the bank guarantees that the financing of the property is not associated with risk, it pays the amount that was agreed upon. At this stage, the money is given to the builder or property owner. The money will be released based on the stage of construction of the property. The payment can be full or partial depending on the stage of construction of the property. In case of resale or completed project, the loan will be repaid in one installment. If the property is under construction, then the loan amount will be paid in installments depending on the stages of construction.
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