After the economic slowdown in 2020, the Indian realty market is gradually reviving its former glory. According to India Ratings and Research,
- HFCs are expected to register a 9.5% growth in their overall assets by FY22, primarily driven by stable home sales growth.
Moreover, to cushion the economic shock of the FY20, RBI also –
- Slashed the repo rate by 115 basis points since February 2020 and decided to keep the rate unchanged at 4% to date.
This has resulted in historic low interest rates in the lending sector. Further, the Budget 2021 announcement of extended tax benefits on home loan repayment has led this advance to attract a significant number of homebuyers interested in real estate investment.
Nonetheless, being a long-term loan, it entails a detailed home loan procedure that aspiring borrowers need to consider. Proper knowledge of this process helps them navigate through the consecutive steps required to avail this loan.
Steps to follow to initiate the home loan application process
Following are the succeeding steps that aspiring home buyers need to remember to avail the funds within a short period –
- Fill the application form
The home loan procedure starts with borrowers duly filling-up an application form. They need to enter all the relevant details like name, address, occupation, contact number, monthly income, employment and financial details, etc.
They also need to submit information about the property they intend to purchase and the downpayment amount they can afford. Along with that, they must also present supporting documents that include KYC, ITR papers, property papers and others to avail a home loan.
- Document verification
The next step comprises verifying the documents provided. Since it is a crucial part of a home loan procedure, the process may take up to 2 days, and during that time, lenders may also ask borrowers to visit their branch physically for a face-to-face enquiry.
Hence, prospective borrowers need to provide all the information correctly. Otherwise, lenders may reject the home loan application.
- Eligibility check
Before availing a loan, you need to meet some lender-specific home loan eligibility. In this stage, a lender goes for a background check that considers other aspects like your credit history and score, FOIR, etc., to ascertain your repayment capacity.
Depending on this eligibility, lenders determine the interest rate and consider the loan approval. For instance, for high-risk borrowers, a lender may add a risk-premium on top of the interest rate, which increases the rate further.
Hence, to be on the safer side, you need to maintain a credit score of 750 and above throughout.
- Payment of processing fees
Financial institutions, including HFCs, charge processing fees that usually range from 0.25% to 1% of the principal, depending on the lender. Sometimes it can also go up to 2% to 3%. These charges are usually a one-time and non-refundable payment. Individuals need to compulsory pay it, as it is used to continue the home loan procedure further.
For instance, if a home buyer opts for a loan amount of Rs.55 lakh, he/she has to usually pay a processing fee of Rs.55,000 if it is 1%.
Apart from this, borrowers should also know about important home loan fees and charges to make financial arrangements accordingly.
- Loan approval procedure
It is perhaps the most vital part of the home loan procedure when a lender decides if the loan will be sanctioned or rejected. In this stage, borrowers get to know the maximum loan amount they are eligible for and the interest rate. Usually, lenders send this information to the borrower’s registered mobile number.
Select financial institutions offer home loan online with competitive interest rate and flexible tenor.
Such an HFC also brings pre-approved offers for their existing customers. These offers pace up the loan application process to a great extent and simplify it. Such offers are available on various products like loans against property, home loans and several others. You can check your pre-approved offer by entering your name and contact number within 3 seconds.
- Property document processing
Once you receive the home loan sanction letter, you have to submit all the property documents that stay in the lender’s custody till the tenor ends. It includes –
- Sequential details of ownership acquisition
- Applicable NOCs
You may have to produce other documents as well. Moreover, when you opt for a Bajaj home loan, you get a property dossier that guides you to understand the financial and legal aspects of property ownership.
Additionally, there are certain pre-purchase building inspections you must do to avail assured funds.
- Loan disbursal
The home loan procedure ends with credit disbursal that includes accepting the terms of conditions of lenders, signing of an agreement and also the downpayment of the remaining amount.
Hence, with the Indian real estate market expected to reach US$ 1 trillion by 2030, it is high time that you should have a clear understanding of the home loan procedure to expedite this process.