Investing in your dream home is one of the most crucial decisions of your life. This is precisely why your research should be thorough before you get into a long term repayment commitment with any lender. Here is a quick step-by-step guide on the process of availing a home loan – from the point of application to the point of disbursal of the amount.

Step 1: The Application

The application process begins with you filling out a form in which you disclose vital personal and professional information, your assets and liabilities, the property details (in case it has been finalized already) and its estimated cost. The application form may differ in format from lender to lender, but basically it wants similar information.

Step 2: Documentation

Along with the application form you will also be asked to submit the following documents:

• Age proof
• Identity proof
• Address proof
• Proof of your educational qualifications
• Details of your employment (letter from your employer stating the number of years in service)
• Income proof (salary slips)
• Bank statements
• Property details (if it has already been finalized)

Step 3: Processing fee

The lender will also levy a processing fee with you toward the initial cost of processing your loan application. For most banks this fee ranges from 0.25% to 1% of the total amount being sanctioned as a loan. You can try and negotiate with the bank to reduce or waive off this fee, in order to bring down your costs.

Step 4: Evaluation and personal discussion:

Once the application is submitted the bank takes a couple of days to evaluate it and then calls you for a personal discussion. Do carry all the original documents that you have provided a copy of, so that your lender can cross check any information you have already provided. 

Step 5: Bank investigation:

The bank will also need to validate the information you have provided from their end by making a visit to your workplace or residence in order to check your credentials. Since they inform you in advance, try and be available at the chosen destination so that the verification process is completed as soon as possible.

Step 6: Sanctioning of your loan after your creditworthiness has been judged:

Once the bank is satisfied with all the information you have provided, it will sanction or reject your loan based on your creditworthiness. The credit appraisal process takes into consideration your age, income, qualifications and your CIBIL report to see your credit repayment track record. After going through these properly, the bank arrives at a figure for the maximum loan amount it can offer you.

This is conveyed to you by means of a sanction/offer letter. This letter comprises the details regarding

• The loan amount and its tenure
• The rate of interest at which the loan is being offered
• The mode you have chosen for repayment
• Special terms and conditions, if any

If you agree to the all the above, you will sign the acceptance copy that the bank will then keep for its records.

Step 7: Assessment and valuation of the property

Once your creditworthiness has been judged by the lender, it turns its attention towards the property you are about to purchase. Once you have finalized the property to intend o buy, the bank would ask you to submit the original property documents. These documents serve as custody or a security for the bank till such time as you fully repay your loan.

The property documents are as follows:

• NOC or no objection certificates from the legal owners such as the housing society or the statutory development authorities.
• The original title deed of your seller
• Approval from development authorities to construct the property

These documents are thoroughly scrutinized by the legal counsel of the bank to verify their authenticity. The bank will also send an expert representative on the property site to evaluate the property and ensure that the developer has the necessary permissions to carry out construction and the quality of construction and work in progress is satisfactory.

Step 8: Registration process/ signing the loan agreement:

On having completed above mentioned steps, the registration of the property is carried out. The signing and stamping of the loan agreement happens at this stage where you also provide postdated cheques to your lender and pay the stamp duty as required.

Step 9: Disbursement of loan amount:

After the loan agreement has been signed the bank makes the disbursal of the agreed loan amount which is 85% to 90% of the total value of the property. The rest of it you need to pay as the down payment which is also a commitment on your behalf to your lender.

The process of home loan approval, though cumbersome, is pretty comprehensive in India. Provided you have carried out the necessary research and have the necessary documents ready on time, the approval and disbursal of your loan may happen faster than you think.