Home Loan Process Explained!

Everyone dreams of owning a house. Now, this dream can become a reality as we have banks and NBFCs (Non-Banking Financial Companies) ready to finance your dream homes. Are you worried about the Home Loan process? No, that should not be a problem at all. We explain the entire Home Loan Process to make it easy for you to go ahead and acquire your dream home.

Important Points to Remember

Keep the following points in your mind before setting out to search for your dream home:

• Keep your KYC documents in order. It may look elementary, but it is vital. You need these documents at various stages in the Home Loan process.
• Collect your income documents such as salary slips, IT returns, Form 16, financial statements like your Balance Sheets, Profit &Loss statements, statement of account from your bank, and so on.
• Banks provide Home Loans for different purposes such as:
  • Purchasing a readymade house or flat
  • Purchasing a flat or house under construction
  • Constructing a house on your land
  • Purchasing a plot and constructing a house thereon
• Banks finance 75% to 90% of the cost of the house depending on the amount of loan.
• Banks do not include the cost incurred on stamp duty and registration. You have to make arrangements for the same.
• Banks stipulate minimum take-home pay norms. Ensure that you qualify in this regard.

Options Available

There are two options in front of you. You can go for a pre-approved Home Loan depending on your income and repaying capacity. Alternatively, you can look for your home and approach the bank subsequently for the Home Loan. The former option is a better one as you know your budget and can work accordingly. However, with Home Loan service providers like MyMoneyMantra available to help you, it is easy to estimate your eligibility thereby enabling you to plan accordingly.

Keep Finances Ready

In a Home Loan process, you incur various expenses. Make a note of the same and be ready with your finances.

Margin Requirement:

It is the difference between the cost of your home and the Home Loan amount.

Stamp duty and registration:

It depends on where you propose to buy the asset. Every state in India has its stamp duty and registration requirements.

Brokerage:

Searching for a house can involve paying brokerage fees to real estate agents. Usually, it is in the range of 1% to 2% of the cost of the house.

Processing fees:

Banks charge Processing fees for Home Loans. Some banks require you to pay a portion of the processing fees as a non-refundable upfront fee. The processing fees are usually in the range of 0.50% to 1%.

Other fees:

Banks conduct legal searches with the Sub-Registrar’s office to determine the genuineness of the title to the property. The advocates on the bank’s pane do this job for them. Similarly, banks have evaluators on their panel to evaluate your house. Some banks require the borrowers to pay the charges for these services. Most of the banks include these charges in their processing fees.

Creation of charge:

You have to create an equitable mortgage of your property after the disbursement of your loan. Registering equitable mortgages is compulsory in many of the states in India. You have to bear these expenses as well.

Apply for a Home Loan

Once you have your finances ready, you can proceed with searching for your dream home. On finalising your property, you apply for a Home Loan. MyMoneyMantra can help you locate the banks that offer the best Home Loan interest rates. Applying for your Home Loan through MyMoneyMantra has its advantages. We have qualified people to help you in:

• Assessing your profile and recommending the right loan
• Check your eligibility and credit scores
• Help you with the application and documentation process

The Home Loan Process

On receiving your Home Loan application, the bank proceeds with the processing of your Home Loan in the following manner:

• Contact you to obtain your documents and check out your eligibility.
• Obtain your credit history from the credit bureaus to understand your credit behaviour and determine your repaying capacity.
• Verify the genuineness of title to the property.
• Determine the value of your property.
• Conduct a pre-sanction inspection of the property. Usually, the banks interview the borrower to confirm the details listed out in the application. They have people to do independent checks to verify your occupation and employment.
• Process the home loan according to the rules laid down in the credit policy of the bank.
• Provide the sanction letter in the case of approval of the loan. This sanction letter lists out the terms and conditions of the sanction.

Your Responsibilities

On receiving the sanction letter, you have to proceed as follows.

• Go through the terms of the sanction letter and submit your concurrence if you agree to the terms of the sanction. Banks are open to change the terms of the sanction if their credit policy permits them to do so.
• Pay the processing fees when you return one copy of the sanction letter duly acknowledged.
• Complete the documentation formalities.
• Request for the disbursement. You have to bring in the margin money depending on the stages of disbursement.
• Complete the purchasing formalities like registering the sale agreement with the Sub-Registrar’s office.
• Move into your new home with joy.
• Complete the creation of the equitable mortgage as per the law of the state where you reside.
• Ensure that you repay the loan instalments on time every month without default.

We have just discussed the Home Loan process in detail. Now, it should not be difficult for you to acquire your dream home.

Also Read:  5 Things to Check before Applying for a Home Loan

To apply online for Credit Cards, Secured Loans and Unsecured Loans, visit www.mymoneymantra.com, the leading online lending marketplace that offers financial products from 100+ Banks and NBFCs. We have served 4 million+ happy customers since 1989.