Complete Guide to availing a home loan in India
What is a home loan?
Steps involved in availing of a home loan 1. Application Process
The home loan process starts with an application, which needs to be filled out and submitted to the bank or the finance corporation, along with a few documents. The submitted application and documents further undergo verification. Documents usually include:
- Identity, address, age proof. Example: Aadhar Card
- Educational Certificate
- Job details
- Bank Passbook
- Proof of income. Example: Income Certificate
- Pan card
- Prospective Property details
2. Loan Processing Fee Payment
There is a fee charged for the processing of the loan. The financial institution usually charges around 0.5 to 2% of the total loan amount. The total chargeable amount would include Goods and Service Tax (GST) of 18% on the initial processing fees. This whole amount charged would stay nonrefundable.
Few banks don’t charge a processing fee to attract more applicants. Negotiations regarding the processing fees may enable the applicant to avail of some financial benefits, however, most banks don’t opt on reducing or waving off the processing fees.
3. Examination of Application
In this stage, appropriate officers would examine the application and documents previously submitted. This examination follows the payment of the loan-processing fee. The examining officers would later assess the loan amount eligible for the applicant based on his creditworthiness.
The applicant would have to meet the bank officials within 2 to 3 days after the submission of the application and documents for assessment of repaying ability. After personal interaction, the bank officers would pay a visit to the applicant’s office and residence to scrutinize the information previously submitted through the application. Further, they would also examine the credit history of the applicant through their CIBIL score.
4. Assessment of repaying ability
5. Offer Letter
After the bank decides to sanction the loan to the applicant, it drafts an offer letter, which contains the following details:
- Amount Sanctioned as home loan
- Rate of interest
- Fixed or floating rate of interest
- Loan period
- Payment Mode
- Pan card
- Terms and conditions applicable
