With the real estate market booming everyday, now’s the right time to opt for a home for you and your family. There are a lot of thoughts that go into purchasing a property. You go through the laborious journey of picking an area, a property, gauging out its price and value, and a lot of other things as well. There are a lot of things that you need to know before buying a home.
The first thing that you need to know about is housing finance. It’s not simple. When you think of paying for your home, you might think about getting a Home Loan. With many government banks and private finance companies offering attractive schemes for Home Loans, you’re in the right market. Some Home Loan offers even cover up 80% of the total cost of your entire property.
If you’re still stumped by the process, then you aren’t alone. Many Indians feel the same. Here’s a quick step by step guide to follow, if you’re planning to apply for a Home Loan.
Navigating the Home Loan Maze
Once you decide the lender, have a look at the price of the property and determine if it falls within your budget. Although this will be done by the bank/NBFC later on, take a look at your bank statements and repayment history, for past loans. Now is also a good time to make sure that you don’t have any outstanding loans/debts that has to be cleared off.
What you’re essentially doing is gauging your Home Loan eligibility. Depending upon the bank/NBFC the you decide, the rules may differ slightly. But for the most part, all of the above stated criteria are valid and very much scrutinized.
Starting Your Application
Get your hands on the application form. This will be available either online, or at the nearest branch of the bank/NBFC you’re planning to get your Home Loan from. Fill the form completely, and attach all the documents required. ID proof, address proof, bank statements, and photographs, are some of the few documents you will have to provide.
Online applications make the approval process faster. The form has to be submitted along with the non-refundable fee, which could be up to 1% of the loan amount.
Face to Face Meeting
Once the form has been examined, you might be called for a thorough discussion about the loan amount and EMI payment, along with the tenure. This doesn’t take too long, and you should have your loan approved once the meeting is done. Carry originals of all the documents for which you have submitted photocopies earlier with the application.
Investigation of Documents
This is a very crucial stage of your loan application. The bank/NBFC would usually conduct a field investigation to cross-determine all the information provided by you. You may even have representatives visiting & investigating your place of residence. All of the references provided in the application will also be contacted and determined.
Once the investigation is done, the repayment capacity is gauged using the CIBIL score and credit history. All previous repayment records will also be examined. If it is found to be unsatisfactory, the loan is most likely to get rejected.
Offer Letter
If your loan application gets approved, the lender will send you a letter that has all the details of the loan. The details include—loan amount sanctioned to you, EMI payments and their due dates, Housing Loan interest rate, and the type of loan (either fixed or floating). This also comes with a long list of terms and conditions that you must go through thoroughly.
If anything needs to be changed, this is the point where the changes should be carried out. If you wish to, you can change a few clauses and terms, after agreements with the lender. If you’re satisfied, then you must send a signed approval to the lender.
Property Evaluation
You will be required to submit certain legal documents with the lender that will be withheld until you finish all the repayments. The property you’re looking to purchase will go through certain technical evaluations by the lender.
This is also done in cases of Home Loan Balance Transfer, in case you choose to opt for one at a later stage of your loan. There are experts that determine the quality and progress of the work put in the property to ensure it meets certain standards.
Loan is Disbursed
Finally, after all evaluation is done and if it has reached satisfactory standards, the lender will prepare the loan papers that are then stamped by the lender’s lawyers. This agreement is signed by you as an applicant, and it is sent back to the lender. Finally the loan is disbursed either in full amount, or in partial payments, as per the agreement.
All of these steps are important, so go through them with care. Most banks/NBFCs would gladly offer you a Home Loan if you meet the eligibility criteria for getting one.
I am a Financial Advisor with an experience of more than 7 years.I had worked for top Financial Firms in India and has been a visiting faculty at many reputed institutes. I have done my post-graduate in Business Economics, from Princeton University, USA. During my free time, I teaches children from marginalised sections of society and also work on my Blog.