Mastering the Home Loan Application Process: A Step-by-Step Guide

The decision to buy a home in India is nothing less than a festival that marks a significant checkpoint in most people’s lives; the decision makes a significant impact on the person’s emotional and financial life. Nowadays, accumulating that much funds is not easy and takes a lot of effort and time, which is why the importance of Housing finance increases. You can save for the downpayment, and the rest can be taken care of by applying for a home loan with a Housing Finance company.

A home loan from a bank, a housing finance company, or a non-banking financial company (NBFC) can help you buy the house of your dreams. These loan providers help make it simple to get the house of your dreams. But, acquiring a home loan as a whole can be time-consuming, so it’s important to know what to expect before you apply. We outlined the whole procedure for applying for a house loan.

Step-by-step guide for home loan application

You should always reach out to the lender after researching from your own end. So that you can understand the terminologies associated with the loan. Find the home you want to buy and see which banks are willing to finance it. You might ask your lender if they have any relationships with specific builders or projects. Before applying for a house loan, it’s a good idea to shop around and find an interest rate that works for you. This is the best way to approach things.

Step 1 – Complete the loan application and attach the required papers: 

The lender will need basic information from you, including your name, phone number, address, monthly and yearly income, employment details, the specifics of the property you want to buy, its estimated cost, the down payment you can provide, etc., to process your loan application. Supporting materials for claims made in the application form must be included. You must supply

  • PAN Card
  • Identity and Address proof
  • Employment details
  • Educational proof
  • Bank Statements of the last 6 months
  • Proof of income
  • Property details 

Step 2 – Payment of the loan handling fees: 

The lender will charge you a fee that you can’t get back. Processing fees range from 0.25% to 1%, but they depend on the provider. The processing fee is what the lender gets in exchange for keeping track of your loan account and doing all the background checks before processing the loan.

Step 3 – Evaluating and Verifying the Repayment Capacity: 

This is a very important part of applying for a mortgage. The loan’s approval is contingent on the lender’s assessment of your application. The lender will give a visit to your place of business or residence to verify the information you have supplied. Your credit history will also be investigated. Your loan’s principal amount will be determined by the lender after they review your supporting paperwork, credit report, and repayment history.

Step 4 – Approval of the loan: 

After you are successful in convincing the lender about the repaying potential then in the next step the lender will send a loan sanction letter. The letter generally contains information about the amount sanctioned, interest rates, repayment schedule, and terms and conditions. You have to Sign the sanction letter that is it is advised to sign the letter after clearing all your doubts. Don’t forget to make a backup copy for your files.

Step 5 – Verification of Property with a Field Visit: 

Your loan application may have been approved and you may have even received an offer letter, but the lender still has to verify the property you want to buy before they will release the funds. The lender will want to see the original copies of paperwork related to the property you want to purchase, such as the title deed and no objection certificate.

Step 6 – Disbursal of Loan Amount: 

After completing all the formalities the loan is disbursed and this is the last stage before closing on a property loan. Following your completion of the above-mentioned stages, your lender will be able to register a loan against you on your profile. Now, it will become your duty to maintain your timely payments so that you do not worsen your CIBIL score.

Government of India’s Contribution to Your Home Loan

The Government of India plays a significant role in supporting and facilitating affordable housing and home loans for its people through various initiatives and schemes. The government’s initiatives in the form of the PMAY scheme are designed to provide financial support to the people of India to make housing accessible and more affordable for a broader segment of the population.

Pradhan Mantri Awas Yojana (PMAY): PMAY is one of the most prominient schemes introduced by the Indian government for making housing more accessible for middle and lower economical background people. It aims to provide “Housing for All”. Under PMAY, there are two components:

  • Affordable Housing in Partnership (AHP):
  • Credit-Linked Subsidy Scheme (CLSS):

CLSS provides subsidies on the home loans for the eligible beneficiaries on the other hand the AHP is subjected to provide affordable housing through partnering with the public and private sector entities.

What is the PMAY Calculator?

To determine how much of a subsidy for a house loan you could be eligible for under the Pradhan Mantri Awas Yojana program, you can use a PMAY subsidy calculator.

A PMAY subsidy calculator is a self-help tool that operates on the computation algorithm of PMAY scheme. Household income, mortgage principal, and loan maturity must all be included. Within a few seconds of entering this information, the PMAY loan calculator will provide you the beneficiary category and the home loan subsidy amount.

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