Owning a home gives a feeling of stability in life. But with the rising prices of property in India, buying a house is not a very easy task. However, this process has been made considerably easy by home loans being granted by a range of housing finance companies and nationalized and private banks in the country. Thanks to swelling competition in the housing loan industry, the home loan process in India has become significantly streamlined. Despite shaking off the tag of a long and tedious documentation process, housing loan procedure still requires one to go through certain mandatory stages.
Submission Of Application Form
After choosing a particular home loan, the customer submits the application form to the housing finance company along with other relevant documents as required by the housing finance company. They comprise of documents that establish income, age, residence, employment, investments, etc. You will also need to hand over a cheque for payment of an up front (non -refundable) processing fee of about 0.5-1% of the home loan amount to the housing finance company.
Validation Of The Information
Home loan providers validate the information provided by you on the application form. They usually conduct checks on your residential address, the place of employment, and credentials of your employer. Some housing finance companies may insist on a personal interview with you and perform a reference check on the references provided on the application form.
Issue Of Sanction Letter
After due appraisal of your profile, a sanction letter is issued which contains details such as housing loan amount, rate of interest, annual or monthly reducing balance, tenure of the loan, mode of repayment and general terms and conditions of the home loan. This is actually the approval of your home loan by the company. However, the money is sanctioned only after the documents and the property on behalf of which the loan is being granted is thoroughly verified.
Submission Of Documents
Once the sanction letter is passed, you are required to leave the entire set of original documents pertaining to the property being purchased with the housing finance company as security for the loan amount sanctioned. These documents remain in the custody of the home loan provider till the time the loan is fully repaid. Once the documents are handed over to the loan provider, they send all the documents for a thorough legal scrutiny.
Validation Of Property
Prior to disbursement, the housing finance company also conducts a site visit to the property to ensure that all construction norms have been adhered to properly. Once the housing finance company is satisfied that the property is legally and technically clear, they disburse the loan amount. The disbursement from the home loan provider is on the basis of the stage of construction of the property.
Once all the above mentioned processes are fulfilled, the borrower is entitled to take the money from the home loan provider. Until such time that the entire sanctioned amount is not drawn, the customer is supposed to pay a simple interest on the actual amount drawn (without any principal repayments). The EMI payments commence only after the entire sanctioned loan amount is drawn.
