How to get a home loan? A step-by-step guide

Is owning a home your dream? Are you tired of living in a rented apartment? A home loan can be an excellent option for building your own house. Here, we’ll outline the steps involved in obtaining a home loan from a bank.

1. Fill out the loan application form and gather required documents

The first step is to complete the home loan application form. This form will typically include:

• Personal details (name, phone number, etc.)
• Address
• Educational qualifications
• Employment status and details
• Date of birth
• Information about the property for which the loan is requested
• Cost of the property (or an estimated cost if the exact figure is unknown)

After completing the application, you’ll need to attach several valid documents:

• Income proof certificate
• Identification (e.g., Aadhaar or PAN card)
• Age proof certificate (e.g., 10th-grade marksheet)
• Employment details
• Address proof
• Educational certificates
• Bank statements
• Property details

2. Pay the processing fee

To move forward with your application, you must pay a processing fee, which typically ranges from 0.25% to 0.50% of the loan amount. Once paid, a loan account will be created for you, and you'll need to submit some confidential paperwork each year, such as income tax certificates and post-dated checks.

An agent will be assigned to assist you with your home loan application. Some banks may offer no processing fee at all, so be sure to check.

3. Communicate with the bank

After submitting your application, expect a wait of 1-2 days while the bank conducts a thorough review of your details. This step is crucial, and you must cooperate as the bank may ask for clarification on various aspects to assess your loan repayment capacity.

4. Document verification

The bank will meticulously verify each document you provided. Representatives may visit your residence to confirm details and assess your credibility as a borrower. They will check:

• Your previous and current addresses
• Employer credentials
• Workplace information
• Office contact number
• Residential contact number

5. Loan sanction/approval process

This stage involves a detailed review of your documents for loan approval. The bank will assess:

• Your age, qualifications, and experience
• Bank transactions
• Nature/type of business (for self-employed applicants)
• Income (monthly or yearly)
• Job type and position

If everything checks out, the bank will notify you of the maximum loan amount you qualify for, along with an offer letter.

6. Review loan offer

The bank will provide a certified offer letter detailing:

• The loan amount
• Interest rate
• Type of interest (fixed or floating)
• Loan tenure
• Repayment options

You’ll have the chance to negotiate the interest rate before accepting the offer.

7. Legal verification of property

The bank will conduct a legal check on the property you intend to purchase. You can request a specific time frame to finalise your property selection. All original property papers will be held by the bank, which may include:

• Basic details of the seller (name, education certificates)
• No Objection Certificates (NOCs) from various authorities
• If applicable, NOC from the lessor for leased land

A lawyer appointed by the bank will validate the property documents.

8. Technical check and site estimation

The bank will assess the property site to evaluate the quality of construction and estimate the time required for completion. An additional fee for this estimation may apply.

9. Final loan agreement

Once the technical evaluation is complete, the final loan agreement will be drafted, reviewed, and stamped by the lawyer.

10. Memorandum of Execution (MOE)

At this stage, you will sign the home loan agreement and submit a required cheque along with the original property papers. Video documentation of this process may occur as proof. The MOE may incur a stamp duty, which is the applicant's responsibility.

11. Loan disbursal

After signing the necessary documents and completing all legal checks, the loan amount will be disbursed via cheque. You’ll need to submit essential documents that confirm your personal contribution to the property. If you're seeking additional financial assistance, you must provide proof to the bank before funds are released.

Conclusion

Home loans can help fulfil your dream of owning a home while managing financial obligations. It's essential to keep your documentation organised and updated to streamline the approval process. Research various interest rates and options to find the best fit for your financial situation.