Owning a home in India is something that everyone desires. Homeownership symbolizes financial stability and security in one’s life. Renting a home has multiple issues, one being that renters can only get a lease for around 11 months at a time, renewing which becomes tedious and chaotic. But with rising prices, having a home in India is a luxury nowadays. However, it also depends on the area where your home is situated, and the amenities available. So, if you want to buy a home instead of renting, you might want to consider getting a home loan.
Understanding the home loan process is very important because one should know the criteria to apply for the same. Factors like age, employment and others matter when it comes to being eligible for a home loan. One should also be careful of the terms and conditions of taking a home loan from a particular bank. Finding out about any schemes that may help reduce interest rates and such would also be beneficial. Now let’s dive into the process of getting a home loan in India.
Eligibility for a Home Loan
Certain criteria need to be followed before applying for a home loan:
Age: Be it a salaried employee application or a self-employed professional, their age must be between 23 years to 70 years.
CIBIL Score: The CIBIL Score of 725 or higher is essential to get a home loan.
Employment type: The employment type and stability also matter as they play an essential role in repaying the loan. If a person with an unstable income wants a loan it gets difficult to get a home loan.
Steps Involved in Getting a Home Loan
1. Fill out the loan application form, give documents & pay the processing fee:
Fill out the application form of an applicant with personal details, and submit the necessary documents related to educational qualification, employment details, and property details of the applicant. Pay the specified processing fee which ranges between 0.5% to 0.50% of the requested loan amount. Get the verification of the documentation.
For instance, if the home loan applicant has applied for Rs. 25 Lakh, then the processing fee will be Rs. 6,250 (at 0.25%) and Rs. 12,500 (at 0.50%) accordingly.
The bank examines all the details submitted by the applicant for the verification process.
2. Approval of the loan:
In this stage, the loan is sanctioned which is the most essential part of the process. The outcome of sanctioning the loan can be positive as well as negative. If the bank is not satisfied with your documents, the chances of the loan approval are less comparatively. If everything goes great, you will get the loan sanctioned or approved as soon as possible.
3. Deep checking by the bank before approval:
The bank does a deep check factoring all the following in before giving approval.
- Age, Qualification, and work experience
- Transactions made earlier
- Yearly or monthly salary
- Current employment and job sector
- Business details if self-employed
- Ability to pay back the loan amount with the interest rate
4. Processing the Offer Letter:
As and when the loan is sanctioned or approved, the bank will send a certified offer letter, which has the following details mentioned below:
- The loan amount that is being approved.
- The interest rate applies to the total loan amount.
- If the interest rate is variable or fixed.
- The loan’s tenure details.
- The mode of loan repayments.
- Terms, policies, and conditions applicable for the home loan.
The Acceptance Copy: After the applicant’s agreement, he/she has to sign the duplicate copy of the offer letter, to keep in the bank’s record.
5. Legal and technical checking/procedures:
Once the property is selected, the bank legally checks the property that is to be purchased by the applicant for authentication. The application submits the documents to the bank and it remains with the bank until the loan is repaid by the applicant. This is security kept with the bank until the loan is paid back. The bank also sends a property specialist to check the property site for technical checking which is essential.
6. Final deal and agreement of the loan:
Once the technicalities are verified, the bank’s lawyer finalizes the loan documents, drafts them, and gets them stamped and the final agreement is signed by the applicant. Now everything is legally clear, the loan amount is given through a cheque.
These are the necessary procedures to be followed to get a home loan from a reputed bank to buy a home of your own in India.
