A home loan is a type of secured loan in which many reputed lending institutions offer loans at competitive interest rates. If choice be, one can keep any valuable asset as collateral against the loan. The availability of easy repayment in terms of EMIs, simplified documentation and hassle-free application of home loan procedures, has made many individuals realise their wish for a new home.
What are the 6 steps of the home loan application procedure?
Generally, to apply for a home loan, individuals need to follow a few simple steps specified by the lending institutions. Though the application process may vary across different financial companies, the basic steps of the application will remain similar. Here are the 6 essential steps of a home loan application:
Step 1: Application process
The first step begins by filling in a home loan application. One needs to enter all personal credentials like name, contact details, employment type, detailed address, etc. Upon completing this step, a representative of the respective lending institution will contact the applicant.
Step 2: Applicant’s assessment and confirmation
Whenever a borrower opts for a housing loan application, lending companies will assess a borrower’s financial situation. At this stage, these companies will understand whether a borrower is eligible for the home loan amount as applied.
Upon completion of this assessment, a face-to-face appointment will be set with the financial company representatives for finalisation. In addition, the authentication of the documents submitted, CIBIL score and credit history will be analysed before processing further with the application of home loan procedure. It is pivotal for borrowers applying for a home loan to understand how a credit score can determine home loan EMIs.
Step 3: Collection of documents
To apply for a housing loan, it is essential to submit a few documents that a lending agency requests. These documents mainly include:
- Identity proof – PAN, Voter Id, Aadhaar Card
- Address proof – Ration card, Telephone or electricity bills, etc.
- Age proof
- Employment documents
- Payslip for the last 2 months
- Bank statements for last 3 months (for a salaried individual) and last 6 months (for a self-employed individual)
Also, there might be additional requirement of documents for both salaried and self-employed borrowers, as per the financial company. Hence, checking the documents needed for a home loan application is quintessential.
Step 4: Determination of repayment capacity
In this step, a lending institution determines a borrower’s ability to repay the principal loan amount merged with the interest. This assessment will determine whether the home loan application will be approved or rejected.
To avoid this rejection, borrowers can use a home loan calculator to assess their eligibility over repayment capacity and loan amount to be applied for.
Step 5: Property verification
Before sanctioning a house loan, a lending institution will verify the property and its documents like copies of the title deed, certificate of no objection, etc. Therefore, the conduction of verification, investigation and evaluation of property by a financial company is pivotal in this case.
Step 6: Offering sanction
The application for a home loan procedure is completed upon receiving a sanction letter. Upon meeting all the requirements and completing all above steps, a financial company offers a sanction letter consisting of the loan amount, type of interest rate to be applicable – fixed or variable, rate of interest and repayment tenor.
The hassle-free home loan application procedure offered by reputed lending institutions helps borrower fulfil their dream of purchasing a new house. In addition, various recognised financial companies offer pre-approved loan offers on secured loans like home loans and loans against property. Borrowers can check their pre-approved loan offers by providing their names and contact information.
With the inception and incorporation of the simplified and streamlined application of home loan procedure, realising the dream of a home is now a few clicks away.