Procedure of Home Loan

                                      

Having own home is always a dream of each person in this world. The prices of the property in India are touching sky, due to high inflation. In this scenario, thinking of buying own home with own means, i.e. with savings and accumulated wealth looks next to impossible. Therefore, many people opt for the home loan for having the own home. The person can get finance for home from financial institutions, national or private banks, and housing finance companies. The person has to follow various steps for availing the home loan.

Procedure of Home Loan

1.      Choosing of Home Loan

The person should do a thorough study before applying for the home loan and should choose the home loan that suits his requirements.

2.      Application Form submission

Once the customer decided about the home loan option, then the customer has to submit the sign application form with various documents and the processing fee. The processing fees vary from bank to the bank, but mainly banks charge around 0.5% - 4% of the home loan amount. The common documents that all lenders require are: identity proof, residential proof, bank statement of last 6 months, income proof, employment details, and property documents.

3.      Verification of the Information

The bank will verify the customer documents after the customer submit the required documents and application form. This is so, because the lender ensures them self that the customer is loyal, genuine and has the repaying ability.

4.      Issue of sanctioning letter

The bank sanctions the loan application only when the bank satisfies them self fully that the person is not fake. After this, bank issues sanction letter to the person which comprises of the loan amount, loan tenure, interest rate, terms and conditions, and mode of payment of the loan amount.

5.      Submission of property documents

Once the customer receives the sanction letter, the person has to submit original property documents to the bank as collateral for availing the loan. The bank will disburse the loan only when the customer will provide original property documents as collateral and then bank verify these documents.

6.      Verification of the property

In this step, the bank verify the person’s property by visiting the site of the property; to ensure that the property is not disputable and checks the property on the grounds of legality and technicality.

7.      Signing of the Loan agreement

In this step, the person signs the loan agreement and submits it with some post dated cheques.

8.      Procedure of payment

After bank satisfies them self, that there is no risk in lending the money on the property then banks pay the loan amount. The amount is paid to the builder or owner of the house. If the payment is construction linked, the bank disburses the loan amount in installments as and when requirement arises.