Home Loan Procedure
With the increasing competition in the market for offering Home Loans, the otherwise tedious process of availing loans has gone a tremendous change in the recent years. However, there is still some process involved in the procurement of Home loan. It is advisable for you to first look at the different stages required for obtaining a Home Loan. The followings are the step by step procedure of getting home loan:
Step 1 : Application form
The first step involved in applying for home loan is the procurement of application form from the HFC of your choice. The Performa of application every HFC (Housing Finance Companies) is different from the other but about 80% information required to be furnished is the same. Along with the application form necessary documents like address proof, age proof, proof of income, bank balance etc. are also to be attached with the application form before it is submitted to the HFC. Along with all these documents HFCs also ask for processing fee of the home loan that varies 0.25% to 0.50% of the total loan amount.
Step 2 : Personal Discussion
After successfully filling the application form and submitting it to the authority the next step is face to face with bank or HFC where you have applied for the home loan. The bank first evaluates the papers submitted and summons the applicant for the personal discussion regarding the home loan applied for. It is advisable that you carry all your original documents of whose copy you have submitted along with the application.
Step 3 : Bank's Field Investigation
The next step is the field investigation done by the HFC or banks. They sent their representatives to the existing residence of the applicants or their offices for the validation of the documents submitted. This is the essential part for the banks to establish the trust with the applicants.
Step 4 : Credit appraisal by the bank and loan sanction
This is the make or break stage of the process. The bank or HFC will establishes repayment capacity based on your income, age, qualifications, experience, employer, nature of business etc. to access your credential. The bank can refuse your loan application is any discrepancy is found at this stage. But if every thing goes according to the conditions negotiated by both the parties then the bank or HFC sanction the loan that may be unconditional or with some conditions levied.
Step 5 : Offer Letter
After the sanction of the Home Loan, the applicant gets offer letter from the bank or HFC with the following details:
- Loan amount
- Rate of Interest
- fixed or variable ROI
- Tenure of the loan
- Mode of repayment
- General terms and conditions of the loan
- Special conditions, if any
- If the terms and conditions are agreed the applicant has to sign the duplicate copy of the offer letter and that is to be submitted to the Bank or HEC.
Step 6 : Submission of legal documents & legal check
The bank or the HFC now asks for the legal documents of the property involved for applying home loan. All the legal documents of the property involved have to be submitted. The bank does all the legal checks on the property. The documents remain with the bank until the repayment of the Home loan.
Step 7 : Technical / Valuation check
The Banks or HFC then go about the technical valuation of the property. The experts of the bank visit the site that has to be purchased and value it as per the existing rules and regulations. The valuation of the property is the most important aspect that the bank considers before financing any property.
Step 8 : Registration of property documents
After the legal and technical valuation of the property the draft documents has to be cleared by the lawyer and stamping and registration of the documents is needed.
Step 9 : Signing of agreements and submitting post-dated cheques
Now it is time of signing the final agreement of the home loan. After the signing of the agreement a bunch of Post dated cheques are to be submitted as agreed on the agreement paper.
Step 10 : Disbursement
It is time for the final Disbursement of the Home Loan. After the bank or HFC ensures financing the property is involves no risk they pay the final amount that is agreed upon. The mode of payment varies from full to part payment. In the case of under construction property the mode is part payment and in the case of ready possession properties disbarment is full and final.