Home Loan Application - Step By Step Guide

Taking a home loan could be a daunting affair for most new buyers. Here is a step by step guide to help demystify the most crucial aspects, before setting into motion the process of your home loan.

• Residential and identity proof,
• Proof of employment with salary slips,
• Last six months’ bank statements,
• FORM-16 or income tax return,
• In many cases, the bank may even require collateral security like life insurance policies, pledges of share, national savings certificates, mutual fund units, bank deposits or any other form of investments

• Age : Any potential borrower is eligible for a home loan, with an age above 21 years, or less than 60 years to make sure the loan ends before their retirement
• Salary : The higher the monthly disposable income, the higher will be the loan amount a borrower is eligible for. Typically, a bank assumes that 50% of disposable monthly income/surplus income is available for repayment.
• Employers status : Banks and NBFC have a list of good companies, which determine the stability of the borrower’s job, and thereby determine their ability to repay the loan.
• Documents : a typical local application form will have a checklist of Home Loan documents to submit along with a photograph. In addition to all legal documents related to purchase of house below is what is needed:

1. Obtaining your credit report: This is the starting point, and the process has simplified ever since RBI made it mandatory for credit bureaus to provide their customers with a free credit report each year. Any credit score above 750 is considered good, and is an indication of how consistent an individual has been with paying off previous loans.
2. Meeting eligibility Criteria: Every bank has a rule book for eligibility criteria which needs to be fulfilled before the loan is approved. This includes:
3. Down Payment Preparedness: As per the RBI policy, all banks are only eligible to offer a maximum of 80% of the total value of the property as a loan – hence, it is always recommended to keep aside some funds for the initial down payment
4. Filing The Application Form In order to apply for a home loan, you first need to fill in the application form. You will have to enter personal details and loan requirements like- employment, nature of loan, name, mobile number, monthly income, loan amount, etc. Once the application form is submitted, a bank representative will contact you to discuss the procedure.
5. Co- applicant: In most cases, it is mandatory to have a co-applicant. It is important to note, that a co-applicant may or may not be a co-owner, but yet banks insist on having a co-applicant as it gives them extra surety in case of a default or death of the primary applicant.
6. Legal And Technical Check In this step, the lender will send representatives for the inspection of the property.
7. Processing And Verification Of Documentation Once the documents are submitted, the lender will process and verify them. While verification, the lender will also check your credit report.
8. Sanction Letter After the documents are verified, you will receive a sanction letter. This letter will provide information about various details like- the loan amount, type of interest- variable or fixed, rate of interest, loan tenure, etc.
9. Loan Sanction: Based on documentary proof, the bank decides whether or not the loan can be sanctioned to you. The final agreement will be sent to you once the lender conducts all their checks. After that, the loan will be disbursed based on the terms.