A Step by Step Guide to Home Loan Process in India

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home loan process

In an immensely populated country like India, having a roof over the head is a struggle for many. Coming from a diverse economic background, a large majority of the country’s population resides in rented homes and apartments. However, with the real estate industry plummeting in recent years and financial institutions offering affordable loans, people now have the option of taking home loans to buy the house of their dreams.

Home loans are a great way to gather funds for purchasing or building a house in the absence of a hefty bank balance. So if you are considering buying a house in India, before opting for a loan, it is crucial that you familiarize yourself with the home loan process involved. 

Home Loan Process: A Step-by-step Guide

Before you apply for a house loan, it is crucial that you do considerable research, compare various lenders and understand the terms and conditions of their offerings. These are secured loans that come at a predetermined interest rate and repayment tenor, so make sure you choose the rate and loan amount that best suits you.

Next, check your eligibility using the home loan eligibility calculator. The online tool takes into account your salary details, employment type and others, to evaluate your repayment capabilities before you even start with the application. 

House loan verification is a multi-step procedure. Once you have chosen the right lender, all you have to do is follow the step-by-step guide: 

Apply for a Home Loan 

The first step of the process is filling out the application form with the necessary details – name, age, contact number, address, employment and income details, etc. You can choose to fill out the online form by visiting the lender’s website or visit the nearest bank branch to do the same.

Pay the Processing Fee

Once the loan application has been accepted, you will have to pay a one-time processing fee to the lender. Most lenders charge you a nominal fee, usually varying between 0.5% – 1%. However, in some cases, this may go up to 2% – 3%. The processing fee for house loans are non-refundable, but the borrower does have an option to negotiate the same. 

Get your Documents Verified

This is the third and most important step of the home loan verification process. Once the processing fee has been paid, the lender will get in touch with and look into each and every detail provided earlier. This involves verifying all the documents supporting your loan claim, including:

  • Address proof
  • Identity proof
  • KYC documents
  • Recent salary slip (or Form 16)
  • Bank account statement for the last 6 months
  • Property documents 

Apart from these, self-employed borrowers have to provide relevant documents certifying at least 5 years of business vintage.

Prepare for Approval and Disbursal 

The next big step is getting the house loan sanctioned and the amount disbursed to your account. The decision lies solely with the lender after verifying all documents. If at any point of the home loan verification process, information or documents provided by the applicant does not match the original, the loan application may be rejected. 

Get Done with the Paperwork

Once the disbursement is processed, you will need to sign and submit the property documents. In some situations, the lender may ask for the signatures of a home loan guarantor only to be sure that the full amount will be paid back.

A guarantor is a person who is obliged to repay the outstanding loan amount along with additional charges and interest fees if the borrower defaults. Therefore, he/she must be absolutely aware of their own financial standings before signing on the dotted line.

Pay the Down Payment

As a down payment, you will need to pay a certain percentage of the principal amount upfront, as stated by the lender. It is always a good idea to pay a heavy down payment amount, as it reduces your monthly EMI load throughout the home loan tenor. 

Loan Disbursal 

Upon completion of all the above steps, you can expect the amount to be transferred to your bank account in 3-4 working days.

The home loan verification process may seem tedious, particularly if you are new to this. But having gone through every step in detail can help your doubts and make the entire procedure smooth, hassle-free and faster. If you find yourself stuck at any point, feel free to contact your lender for assistance.