Home Loan Process

Step 2: Processing fee payment

After you submit the application, you will have to pay a one-time non-refundable processing fee. This is the fee charged by banks and housing finance companies (HFCs) for processing your loan application.

Processing fee is usually in the range of 0.5% - 1% of the loan amount. However, you may find certain lenders that offer to waive the processing fee. It’s important to check with your lender about the processing fee before applying.

Step 3: Document verification and background check

All the documents that you submit with your loan application will be verified by the bank. This is an important stage and may take a few days for the bank to completely verify your documents. During the verification, the bank may also ask you for a face-to-face interview.

In addition to documents check, the lender will also perform your background check. This may include checking your residential address, your place of employment, your contact number, etc.

Step 4: Home Loan Approval

At this stage, the bank decides whether to approve your home loan or not. To make sure your home loan gets approved, it’s important to submit all the required documents with correct information. If the bank finds any discrepancies, it reduces the chances of your loan approval.

Check out some of the key things that banks consider before approving your home loan:

• Your credit score
• Your income
• Your age
• Your current employment status
• Your existing debt obligations
• Your property details (like construction status, age, etc.)

Step 5: Home Loan sanction letter

Once the bank or housing finance company has decided to approve your home loan, they will issue a sanction /offer letter. The letter lists all the details of your home loan offer, including the loan amount, the rate of interest, loan tenure, the mode of loan repayment, and all other terms and conditions.

It’s important that you read all the terms and conditions carefully. Once you have read the T&Cs, you will have to submit a signed copy of the offer letter to the bank.

Step 6: Verification of the Property

Before the bank disburses your loan, they will have to verify the property you are buying. You will have to submit all the original property documents, including the title deed, no objection certificate, seller’s identity and address proof, etc.

The bank will conduct a legal check to ensure the property is free from any disputes. Following the legal check, it will conduct technical valuation of the property to know its fair value. This may involve analyzing the location, construction status, property age, quality of construction, maintenance, locality, etc.

Step 7: Loan disbursal

Once the bank completes the property verification, it will start drafting your home loan agreement along with all the agreed terms and conditions. You will have to sign the home loan agreement. After you sign the agreement and clear all other formalities, you will get the loan amount in your account.