Are you planning to go in for a home loan in the near future? Kavita Sriram has a step-by-step guide to make the process of availing a home loan easy
The process of acquiring a home loan is a long one. Here is a step-by-step guide that can help a prospective homebuyer.
Formal application
The process of acquiring a home loan starts off with an application supported with necessary documents. Some banks charge a processing fee at the time of applying for a loan. This fee is usually a non-refundable amount of around 0.5 percent of the loan amount. Most lenders seek personal details, income information and details about your education, property and estimated purchase cost in the application form.
Documents for proof
The home loan applicant is expected to furnish certain valid documents as proof.
Some documents needed:
• Certificate of income
• Proof of age
• Photo ID
• Continuity of service
• Residence address proof
• Employment details
• Educational qualifications
• Property to be purchased
• Bank account details
Verification of application
The bank conducts an elaborate verification on creditworthiness, and on issues such as previous defaults and other debts. Depending on your income level and financial condition, the lender computes your loan eligibility. If the bank suspects your repayment capacity or if the information given by you is incorrect, your loan application may be turned down.
Property evaluation
Experts visit and evaluate the property you intend to purchase. Banks usually have a team of legal experts who make legal verifications of documents. A home loan is a secured loan where the property you intend to purchase is used as collateral. Hence, the lender conducts technical valuations and monitors the various stages of construction through the tenure of the loan.
Home loan agreement
The lender sends an offer letter that contains details of the loan amount sanctioned, interest rate applicable, tenure, repayment options and terms and conditions associated with the home loan. The applicant must read the loan agreement carefully and sign it if he has no objections to it. Apart from post-dated cheques that must be submitted to the lender, the applicant must pay stamp duty and other fees.
The original property documents are retained with the lender till the loan amount is repaid by the borrower.
Loan disbursement
After the home loan agreement is signed, the loan disbursal process begins. There may be slight variations in the process/sequence from lender to lender.
Identify the right property that is free of litigations and is located in a good neighbourhood. Then select a good lender who offers low rates and doesn't levy heavy penalties and fees. If you have all documents in order and no previous history of defaults, getting a home loan will not be an ordeal at all.
Courtesy:- FT dt:- 22/11/2009
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