Owning a house is a great achievement in anyone’s life and getting your own home is even better. Nevertheless, the process of acquiring the home loan might seem herculean if at all you have never embarked on the process before. This is a detailed hall pass that guides the reader through the process of obtaining a home loan.
Determine Your Budget The first step is to establish your current financial status and determine the amount of money that can be borrowed at most. Generally, your house EMI’s should not be more than 30 to 40 percent of your gross salary. Include also other incidental expenses that relates to running of the house, the down payment and other registration, transfer and stamp duty fees. This will give you a clear picture on the amount of loan you require, to help you in making your decision.
Research Different Banks With your budget in mind, it is now time to understand the various home loan products offered by the leading banks; in the public as well as in the private domain. This includes interest rates, payment period, mode of payments and the fees charged in processing the loans. Also learn about the other documents needed and whether there is any special scheme or offer applicable that may be taken. This research will assist you in identifying the appropriate home loan product for your budget and requirements.
Check Your Credit Score The first and probably most crucial requirement that lenders consider is your credit score. Your credit score is a whole number ranging from 300 to 900, which defines your repayment attitude according to your credit records. Your credit score can be obtained from authorized credit reference agencies. Thus, any score above 750 is regarded as good and a person can easily secure a home loan at a cheap rate of interest. In case you score lower , try to ascertain why and then strive to enhance it from the onset of the application.
Collect Required Documents Getting a home loan involves providing identification documents, proof of residence, income and employment, and proof of assets. Have these documents handy as you shop around for loans from various financial institutions. Few of the documents needed are passport size photos, proof of identity or address, bank statements for the last six months, Income tax returns for the last two years, salary statements and details of existing loans/ assets. Additional documents When completing a self-employed application form, you may be asked to provide details about your business. Check that all the documents are well updated and well organized so as to facilitate the application process.
Choose the Right Lender If all the above formalities are done, it is possible to narrow down on the exact lender that suits your requirements of the interest rate being charged, processing fees and the period of the loan. Among the main public and private banks that provide housing finance, it is possible to name SBI, HDFC, ICICI Bank, Bank of Baroda, PNB and Canara bank, etc. Ensure that the selected bank officials are contacted to get further clarification and detailed information before arriving at the right banker.
Submit Home Loan Application Once you decide with the lender, the next step is to gather home loan application form and start to fill up each and every field. The application form includes the applicant’s personal information and information about the property, loan amount required, and preferred repayment terms. It is crucial to make sure all the information given out is correct. You also have to provide the list of documents mentioned earlier together with the application form. Most banks also have an online application facility added to it for the convenience of the customers.
Property Evaluation The lender will review the application and documents and conduct a technical and legal analysis of the property. This assessment is carried out by an empaneled agency to check whether the property in contention is free from legal disputes and encumbrances. The lenders may decline properties with title under litigation or other civil suits since the property is held as security for the loan balance.
Loan Sanction If the property evaluation report is satisfactory, the next step is to scrutinize your profile including your documents, credit score, eligibility, repayment capacity and purpose of the loan. Should all the parameters align with the lender standards your home loan is approved at this point. The loan amount that gets sanctioned is actually mainly dependent on the individual’s ability to repay the loan along with the budget that the borrower has planned and the policies of the lending company. You also get the information on the interest rate, loan period, monthly installments, and other conditions of the particular loan.
Legal Verification After the sanction of the loan, a legal department from the bank checks the authenticity of the property documents as the final check before the disbursement of the loan. The documents include the sale deed in the current owners name and also records showing payment of all bills and taxes pertaining to the property.
Loan Disbursal Upon completion of the property documents verification, the final loan agreement is signed by both the lender and the borrower. It also holds all the details regarding the home loan like the interest rate, loan tenure, penalties if any, and the amount to be paid in the form of EMI on a monthly basis. Once you have signed this agreement, the required amount of loan is credited to your bank account.
To go through this process of getting a home loan as described above can assist to ensure that your home loan application is a success and also assist in ensuring that you land on the best home loan deal of your choice. Please do let us know in comments section in case you need some more guidance on how to apply for home loan.
