How To Apply For Home Loan?

Home Loans A guide to the application process

It is always a dream for many people to have their own homes. Nevertheless, getting a home loan may take a lot of time, especially if it is the first time one is applying for the loan. From how to shortlist the banks to the documents required for a home loan and how you can get your home loan approved this guide will help you through the entire process. Read on to know how you can make the application for home loan all the more easy, clear and hassle free.

Do Your Research The first thing that needs to be done before applying for a home loan is to gather information on the different banks as well as the different housing finance companies HFCs and the available home loan products. Collect information on the interest rates being offered, fee charges for processing, repayment methods and conditions for qualifying for the loans. Other sources of information that you can use to gather information include the internet sources such as the websites of the various banks, printed sources such as brochures which may contain information about the various choices available, as well as the word of mouth sources such as discussing with friends or relatives who may have taken a certain choice. This will help you narrow down some choices. Particular emphasis should be placed on banks with a large share of home loan products in their portfolio and a large number of branches.

Check Your Eligibility Having a fairly good idea about the various lenders, evaluate your chances of getting a home loan. Most of the bank’s websites have a quick loan eligibility checker where you can determine the amount you can borrow from the bank depending on your income, the company, experience, credit score and your ability to repay the loan. Make sure that when you are using these calculators you are realistic about the expenses and liabilities. This helps in understanding clearly the amount that one is likely to pay down for the specific property of choice as well as the EMI one can comfortably afford.

Improve Your Credit Score It determines the home loan amount and the rate of interest that you would be charged by the bank. It means that if your score is high, you will be a trustworthy borrower and banks can provide you with a bigger amount at lower interest rates. If you have a bad credit score, you should begin improving your score at least six months prior to the time you will be applying for a home loan. Pay all your credit card bills and loan EMIs on time. That is why you should avoid having fresh credits, which will lead to high credit utilization ratio.

Collect Documents Income proof documents such as salary slips, bank statements, Form 16 and others are needed to cross check the information provided by the applicant in the home loan application. It is also advisable to start compiling certified copies of all these documents in advance especially where some of the documents will be obtained from your employer or chartered accountant. It should be prepared even before you complete the form of the home loan application. This will make the process faster and avoid the use of a lot of paper.

Select the Appropriate Home Loan Scheme Analyse the different home loan schemes provided by the shortlisted companies in detail. Many of the banks come up with products such as fixed or flexible interest rates, fixed or flexible repayment period and transfer schemes. Select an offering that is more appropriate in terms of your financial status – fixed rates are suitable if you do not expect the rates to be reduced in the future while floating rates are appropriate where there is likely to be a reduction in rates in the future. Do not hesitate to bargain with the banks and do not shy away from asking questions until you find the home loan program you need sufficiently.

The Home Loan Application Form should be filled in. The next process is to complete an extensive application form either online or by completing a form at the branch with the help of a branch officer. Please state all the facts truthfully about your financial status, debts, any property, and this property here. All documents must be submitted in certified copies. Some of the banks have end-to-end digital processes, which cuts down time on verification and less paperwork. Before signing the application, the applicant should ensure that the bank representative explains the meaning of any term that the applicant does not understand.

Property Evaluation The property that you are going to purchase will be assessed by the bank through the empaneled valuers before they approve the home loan. The valuers ensure it is legally okay to be sold without legal challenges regarding ownership and also determine the appropriate price for that area. And please do not attempt to skew the property value up in this property location. For this process, you will be required to meet the bank’s valuation charges.

Loan Approval Using the findings of the property evaluation and the information you filled in the application form, the bank goes through several credit checks and risk assessment to approve your home loan application. This may take a few days to a few weeks depending on the bank and kind of account being opened. contacts you once the loan is actually approved and provides the sanction letter that outlines the loan details including the amount, the period it will take to be repaid, the agreed interest rate and the EMI. Read this carefully before putting your signature on the letter to accept the home loan offer.

Legal Vetting Once you apply for a loan with the bank, the legal and technical teams of the bank recheck the forms of the property sold to you by the seller. This is referred to as legal vetting and is done for a fee by the involved banks. At this stage, you will be required to provide the bank with the original property documents. If necessary, correct any errors in the legal documents as advised by the bank team.

Disbursal of Loan All the home loan applications right from sourcing to processing and disbursal to the customer can be summarized and they involve the following: All verifications done and the loan amount is credited to your account. It takes about several weeks up to several months depending on the flow of the banking procedures. Make sure all the necessary signatories to the bank agreements have signed before disbursement. Now you are finally ready to get possession of the house that you have always dreamt of!

If you do not want your home loan application to be rejected or encounter any problem, then it is advisable that one should be very careful and serious while applying for a home loan. It is advisable to check up on your application status with your bank’s home loan team periodically. Be willing to offer any additional information they desire before these clients. When we maintain all the documents in places and the finances cleared without any ambiguities, you can look forward to faster approvals and quicker disbursal to start your journey of owning your own home!