Although securing a Home Loan is relatively easier these days with so many technological advancements in the fintech sector, it is imperative to be aware of all the steps followed in the Home Loan application process. Firstly, by knowing all the steps beforehand, you can make the necessary arrangements, from lender selection to required documents, from ensuring you meet Housing Loan Eligibility to checking out the EMI amount you can manage.
Conducting proper research and gathering every detail about the Home Loan before you proceed with an application are the unwritten rules that every Home Loan aspirant must adhere to, as it is a long-term investment and will impact your monthly expense management. Also, this kind of organized approach will boost your chances of availing a low-interest rate Home Loan that will save a considerable amount in terms of interest paid. Therefore, let’s discuss all the steps involved in securing a Home Loan so that when you approach a lender, you shouldn’t encounter any surprises and you have the best chance of succeeding on the first attempt.
Step-By-Step Guide To Avail Of Home Loan
Step 1: Filling Out The Application
Like all other loan acquisition formalities, Home Loan availing starts with filling out a loan application form immediately. These days most lenders allow you to apply for a Housing Loan through their official website, making the process more seamless. Some of the basic details requested by the fintech companies offering Home Loans are,
- Name of the applicant
- Permanent and Current Address
- Educational Qualification
- Contact information such as mobile number & email ID
- Type of employment such as salaried, self-employed, or business owner
- Monthly income earned
Step 2: Documentation
Once you furnish the basic details, you must attach the following documents for verification. The Housing Loan Eligibility and documents vary slightly for salaried & self-employed applicants when it comes to income proof.
Documents For Salaried
- Residential Proof – Passport, Aadhar card, Driving Licence, Mobile Bill, Ration Card, Voter ID, or any other certificate from a recognized authority
- Age Proof – Passport, Aadhar card, or any other certificate from a recognized authority
- Income Proof – Salary slips of the previous 3 months, Form 16 of the last 2 years, and 6 months of bank statements.
Documents For Self-Employed
- Residential Proof – Driving Licence, Aadhar card, Passport, Utility Bills, Ration Card, Voter ID, etc.
- Age Proof – PAN Card, Passport, 10th marks card, etc.
- Income Proof – Business existence proof, Previous 3 years’ income tax returns, audited profit-loss balance sheets, and last 12 months of bank account statements.
Also, for a Home Loan, fintech institutions request an approved sanction plan copy from the authority.
Step 3: Processing And Verification
Once the Home Loan application and required documents are submitted, the fintech institutions start processing them one by one. First, they will verify and validate all the documents submitted. The subsequent step is to check the creditworthiness of the applicant. Finally, the lender conducts a full inquiry into your CIBIL score. Hence you must maintain a healthy credit score by paying existing debts in a timely manner.
If you meet the Housing Loan Eligibility criteria and your submitted documents are in order, then the lender will proceed to the sanction step.
Step 4: Sanction Letter
If your Home Loan application processing is successful, the fintech firm will send you a loan sanction letter. This document will act as proof that the lender has approved your Home Loan. The details included in the sanction letter are,
- The loan amount was approved.
- The annual interest rate offered.
- Whether the fixed or variable interest rate.
- Repayment tenure.
- Terms & conditions of repayment, prepayment, etc.
Step 5: Legal And Technical Check
Before the fintech firm credits the Home Loan amount to your account, it conducts legal and technical investigations. The lending firm’s team will verify the property where you are planning to construct or buy a house. They will check and verify if the ownership rights of the property belong to the borrower. The team will also validate the documents submitted; if any discrepancies are found, there will be further investigation.
Step 6: Loan Disbursal
Once the fintech firm is satisfied with all the above steps, your Home Loan is approved, and the amount allotted will be credited to your bank account.
Most fintech institutions will follow the above procedure to approve a Home Loan barring a few exceptions. Hence, you can confidently utilize the above steps and avail of a Home Loan from a reputed lender to build your dream palace-like home.